THURSDAY, AUGUST 24, 2017 ~ VOL. XXXV NO. 144
com EUROPE EDITION
DJIA 21812.09 g 0.40%
Whats
News
Business & Finance
W PP shares were off
11% after the firm re-
ported a surprisingly steep
slowdown in ad buying
from consumer-goods
companies. A1
 Saudi Arabia's plan to
list its state-run oil com-
pany has prompted other
Middle Eastern nations to
raise capital on equity
markets. A1
 Google and Wal-Mart
are joining forces in an e-
commerce partnership
that includes voice-or-
dered purchases. B1
 Samsung debuted its
new Galaxy Note 8 phone,
showing improvements
from a previous model that
caused a scandal. B1
 Whole Foods sharehold-
ers approved Amazons
takeover of the grocer,
moving the deal one step
closer to completion. B2
 Cargill has invested in a
startup that is developing
technology to grow meat
from self-reproducing ani-
mal cells. B1
 Four mutual funds have
significantly marked down
their investments in Uber
following the companys
turbulent year. B3
 After waiting years for
rates to rise, banks are
loading up on loans and se-
curities that carry low rates
for long periods. B5
 The U.S. is considering
restricting trades in Vene-
zuelan debt as it seeks to
punish President Maduro
for undermining the coun-
trys democracy. B8
World-Wide
 The worlds major
economies are growing in
sync for the first time in a
decade, helped by low-in-
terest-rate stimulus and
the fading of crises. A1
 Jared Kushner will lead
a delegation to try to ad-
vance talks between Israe-
lis and Palestinians. A3
 Saudi Arabia is court-
ing Iraqs Shiite leaders
and reopening borders be-
tween the countries after
years of rancor. A3
 The Trump administra-
tion outlined new measures
it plans to take to press
Pakistan to stop harboring
extremist groups. A4
 Trumps efforts to re-
boot U.S.-Pakistan relations
as part of his new Afghani-
stan strategy may be chal-
lenged by a rising Pakistani
politician. A4
 Kim Jong Un appeared
in state media visiting a
missile production factory,
hours after Tillerson
praised his restraint. A5
 The U.S. Navy removed
the commander of the fleet
that has suffered four re-
cent collisions and the
deaths of several sailors. A5
 The U.S. president
threatened to shut down
the government if Congress
doesnt approve funding for
a Mexico border wall, rais-
ing alarm among some Re-
publican lawmakers. A6
 Chinas unofficial cam-
paign against South Korean
goods is leaving some Chi-
nese citizens in need of em-
ployment. A5
CONTENTS
Business News..... B4
Crossword.............. A12
Finance & Mkts....... B5
Heard on Street.... B8
Index............................. B2
Life & Arts......... A9,12
3.20; CHF5.50; 2.00;
U.S. Military (Eur.) $2.20
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Company. All Rights Reserved
WSJ.
NASDAQ 6278.41 g 0.30%
Typhoon Hato Hammers Hong Kong
ANTHONY WALLACE/AGENCE FRANCE-PRESSE/GETTY IMAGES
HIGH WINDS: Hong Kong was hit by its first category 10 storm since 2012, with dozens reportedly hurt. In Macau, three people were killed. A5
Top Economies Are in Sync
Low interest rates
help spur rare growth
in all 45 countries
tracked by the OECD
BY JOSH ZUMBRUN
For the first time in a de-
cade, the worlds major econo-
mies are growing in sync, a re-
sult of lingering low-interest-
rate stimulus from central
banks and the gradual fading
of crises that over years rico-
cheted from the U.S. to Greece,
Brazil and beyond.
All 45 countries tracked by
Aramco Triggers
Mideast IPO Rush
Saudi Arabias plan to list
Saudi Arabian Oil Co. is send-
ing other Middle Eastern na-
tions rushing to raise capital
By Sarah McFarlane,
Christopher Whittall
and Summer Said
on equity markets, potentially
privatizing swaths of the
state-run energy industry for
the first time.
Three years of lower energy
prices have pushed regional
governments dependent on oil
revenue to tap public markets
as a way of plugging holes in
their budgets. Gulf nations are
also looking to this tactic to
diversify their economies.
Many governments have al-
ready issued bonds. Now, they
are turning to equity markets,
a move hastened by the initial
public offering of 5% of the
INSIDE
NORTH KOREA
ORDERS MORE
WARHEADS
WORLD NEWS, A5
Markets...................... B8
Markets Digest..... B6
Opinion.............. A10-11
Technology............... B3
U.S. News............. A6-8
ASSOCIATED PRESS
Weather................... A12
World News........ A2-5
BOXINGS EARLY
TOLL ON
MUHAMMAD ALI
U.S. NEWS, A7
NIKKEI 19434.64 0.26% STOXX 600 373.92 g 0.50%
the Organization for Economic
Cooperation and Development
are on track to grow this year,
and 33 of them are poised to
accelerate from a year ago, ac-
cording to the OECD. It is the
first time since 2007 that all
are growing and the most
countries in acceleration since
2010, when many nations en-
joyed a fleeting snapback from
the global financial crisis.
The International Mone-
tary Fund in July projected
global economic output
would grow 3.5% this year
and 3.6% in 2018, up from
3.2% growth in 2016.
In the past 50 years, simul-
company, also called Saudi
Aramco. Once listed, it is ex-
pected to be the worlds larg-
est company by market capi-
talization.
Already this year, there have
been 32 IPOs in the Middle
East, raising $1.5 billion, accord-
ing to data provider Dealogic.
That is more deals than in the
two previous years combined.
Other IPOs are being
planned or have been an-
nounced, according to official
statements and people familiar
with the discussions. Those in-
clude state-owned commodity
players such as Abu Dhabi Na-
tional Oil Co., or Adnoc; Ku-
wait Energy; Emirates Global
Aluminium, and Oman Oil Co.
Some countries want to
beat Saudi Arabia to the mar-
ket, fearful that if Aramcos
benchmark listing flops it will
Please see ARAMCO page A3
This Next Song Is Dedicated
To Our Therapist
i i
At Rock Star Therapy in Los Angeles,
bands in discord air grievances
BY ERICH SCHWARTZEL
LOS ANGELESWhen bass-
ist Ken Christianson decided
to quit the feminist punk
group in which he had played
for nearly two
years, his band-
mates had a re-
quest: Could they
talk it out?
Mr. Christian-
son and the
bands lead singer
headed to the Los
Angeles office of
Jodi Milstein, a
therapist who has
helped many art- Susan
ists find harmony.
She asked us, How are you
feeling? What do you think the
problem is, if there is any?
explained Mr. Christianson. He
ultimately decided to leave the
now four-member group, the
BRENT 52.57 1.35% GOLD 1288.90 0.30% EURO 1.1801 0.33%
Big Firms
Reduce
Spending
On Ads
BY NICK KOSTOV
Some of the worlds biggest
consumer-goods firms are
ratcheting back hard on ad
spending, starving Madison
Avenue of revenue and threat-
ening further fallout among
ad-dependent media firms.
Shares in the worlds larg-
est advertising company, WPP
PLC, fell 11% in London on
Wednesday after the firm re-
ported a steeper-than-ex-
pected slowdown in ad buy-
ing from consumer-goods
companies, especially in
North America.
The company is often con-
sidered a bellwether for a
wide swath of industries be-
cause of its large client base.
Other big advertisers have
been signaling slowing pros-
pects amid a retrenchment
among some of the worlds
biggest packaged-good compa-
nies, such as Unilever PLC and
Procter & Gamble Co., but the
extent of the slowdown at
WPP surprised investors.
taneous growth among all the nance. At the moment, the WPPs woes ricocheted out-
OECD-tracked countries has growth pickup is lifting the side the advertising industry,
been rare. In addition to hap- fortunes of car makers in hitting shares of some of Eu-
pening last decade, it has only Japan, coal miners in Indone- ropes biggest media firms.
happened in the late 1980s, sia and forklift makers in Television and publishing
and for a few years before the Germany. U.S. exports grew companies are heavily reliant
1973 oil crisis. near a 6% annual rate in the on the ads that companies like
Its not a particularly fast first half of the year, their WPP place with them. Axel
or thrilling beat, more plodding best two-quarter performance Springer SE, the Berlin pub-
and methodical, but its getting since the end of 2013 and lisher of Germanys mass-mar-
the job done, Josh Feinman, outpacing the average of the ket Bild newspaper and opera-
chief global economist of previous decade. tor of the N24 cable-news
Deutsche Asset Management. The episode could be un- station, fell 1.4% on Wednes-
The development comes, done if synchronized growth Please see ADS page A2
ironically, just as nationalist morphs into overheating. As
movements in the U.S., Eu- years of crisis have demon-  Packaged-goods giants woes
rope and beyond have gotten strated, soaring global stock spread............................................ A2
a new life, driven by suspi- prices or regional property  WPP troubles are already in
cion over global trade and fi- Please see GLOBAL page A2 the price of shares.................. B1
Around the World on Budget Airlines
Singapore
GLOBAL REACH: The final
frontier for low-cost airlines is
$45
$87
45
Kuala
Lumpur $307
global travel. It now is possible
to patch together a round-the-
world trip on budget carriers.
$562* (See map on left.)
This is just one way that
low-cost carriers are
transforming the airline
$477* Athens industry. They arent just
33 $140 competing with legacy
$654*
$166 companies; they are changing
22 Barcelona how, where and at what price
people fly.
$305
Honolulu Last year, for the first time,
$1,911 budget airlines carried more
65
Las Vegas than one billion fliersnearly
30% of the 3.7 billion who took
72 11
$228 to the air.
$117 New York By making travel less
$350
$147 expensive, they are turning
people who previously couldnt
afford to fly into fliers.
As such airlines spread
around the world, they are
introducing regular air service to
Budget airlines $1,620 more remote locations, leading
to more direct city-to-city
Legacy carriers $3,877 choices than ever.
See how budget airlines are
Note: One-way prices based on select travel week of Oct. 8. Individual ights may not add to
total due to rounding. *With one stop conquering the worldin 14
Sources: the companies, Expedia.com THE WALL STREET JOURNAL. charts. A8
Oracle #1
i
SaaS Enterprise
Applications Revenue
Menstruators. Still, its kinda
nice to sit there and talk.
When musicians want to
lend some psychological
grounding to the rock n roll
lifestyle, they call Ms. Mil-
stein, founder of #1
Rock Star Therapy.
She leads group
#2
therapy sessions
for major acts and
rookie groups all
Oracle Salesforce
trying to keep dis- Cloud Cloud
14.5% 12.4%
cord at bay. Ms.
Milstein, a music-
industry veteran
who moved into 1,000+ Employees Segment, 2015
psychology more
Hyatt than a decade ago,
is part of a move-
ment that brings feelings into
the hard-edge world of rock n oracle.com/applications
roll, where brawls and dis-
agreements have built a back
Source: IDC Worldwide SaaS Enterprise Applications Market Shares, 2015: The Top 15 by Buyer Size,
doc #US41913816, Dec. 2016; Table 4. For the purposes of this report, SaaS enterprise applications include
the following application markets: CRM, engineering, ERP, operations and manufacturing, and SCM.
story behind many hit tracks. Copyright 2017, Oracle and/or its affiliates. All rights reserved.
Please see THERAPY page A6
 A2 | Thursday, August 24, 2017
Goods Giants Woes Spread
Worlds biggest
makers of packaged
goods are battling a
host of difficulties
BY SAABIRA CHAUDHURI
The long-simmering pres-
sure facing the worlds con-
sumer goods giants is now
ricocheting more widely, hit-
ting advertising firms and the
media companies dependent
on them.
WPP PLC, the worlds big-
gest advertising holding firm
by sales, said a sharp pull-
back among these core adver-
tisers sent revenue in the
first half sharply lower. In-
vestors sold down WPP
shares heavily and some Eu-
ropean media firms also suf-
fered early Wednesday on
worries that ad buying could
Cost-Cutting Ploy
Hampers Ad Firms
A key cost-cutting strategy
for many firms has been so-
called zero-based budgeting,
the practice of justifying every
cost from scratch each year.
The tool was made popular by
3G Capital, the Brazilian in-
vestment fund that rolled it
out in recent years at compa-
nies such as Kraft and An-
heuser-Busch InBev NV.
The strategy can be par-
ticularly painful for ad execu-
tives, who essentially have to
justify their campaigns to cli-
ents each year. WPP CEO
Martin Sorrell blamed zero-
based budgeting specifically
for some of his firms woes.
Whether they have the
vim and vigor to do that
given the current market situ-
ation is another story, Mr.
Sorrell said. Nick Kostov
GLOBAL
Continued from Page One
markets could quickly turn to
financial mayhem that takes
down economies. Moreover,
central bankers, gathering this
week for the Federal Reserves
annual conference in Jackson
Hole, Wyo., could derail the
upturn if they pull back finan-
cial stimulus too aggressively.
For now, though, the global
upturn appears on track, in
part because inflation is low
and central bankers are mov-
ing gradually.
Federal Reserve Chair-
woman Janet Yellen and Euro-
pean Central Bank President
Mario Draghi, both speaking
in Jackson Hole Friday, can
point to the global backdrop
to justify plans to pull back
stimulus programs. The Fed is
expected in September to be-
gin reducing $4.5 trillion in
holdings built up over the de-
cade to help drive down inter-
est rates and boost risk-taking
by investors, households and
business. The ECB is nearing
the end of its own bond-pur-
chase program.
For the first time in many
years, we are seeing signs of
synchronized economic expan-
sions at home and abroad,
said Fed governor Lael Brain-
ard in a speech shortly before
the Feds June meeting. Ms.
Brainard has been a leading
voice of caution at the Fed
about interest-rate increases.
Now she is supporting the
Feds plan to shrink its securi-
KIMIMASA MAYAMA/EUROPEAN PRESSPHOTO AGENCY
Janet Yellen and Mario Draghi will speak at the Feds annual conference in Jackson Hole on Friday.
dry up further.
The worlds biggest makers
of packaged goods, including
Procter & Gamble Co., Uni-
lever PLC, Kraft Heinz Co.
and Nestl SA, have all strug-
gled with a host of head-
winds. Changing consumer
tastes are favoring healthier,
fresher options for food mak-
ers. New, often smaller, local
upstarts are competing for
sales of everything from
shaving cream to ice cream.
Low inflation in many
parts of the world, until just
recently, has kept them from
raising prices to make up for
slowing volumes.
The industryin many
cases encouraged by activist
investorshas responded by
ratcheting back hard on
costs. The penny-pinching is
hitting advertising budgets
hard.
Unilevers ad spending as a
ADS
Continued from Page One
day. In Britain, shares in
broadcaster ITV PLC fell 1.9%.
Shares of rival ad-holding
companies also tumbled. Om-
nicom Group Inc. declined
6.9%, Interpublic Group of
Cos. 6.3% and Publicis Groupe
SA 3.2%. Media companies
more broadly traded down,
with the S&P 500 Media Index
off 0.8%.
WPP lowered its full-year
forecast for net sales growth
to 1% or less, blaming belt
tightening at packaged-goods
companies that make products
as diverse as beer and sham-
poo. WPP also rattled inves-
tors in March, when it set a
2017 target for net sales
growtha measure used to
judge the companys underly-
ing performanceof just 2%.
Chief Executive Martin Sor-
rell said advertisers in the
packaged-goods sectorwhich
Double the Dow
Year-to-date change in select stock indexes around the world that are
outpacing the Dow Jones Industrial Average
40%
30
20
10
0
10
J F M A
Note: Through Tuesday
Source: WSJ Market Data Group
ties holdings.
A wide range of factors are
at play in the global upturn.
Among them, long-troubled
eurozone economies, even
Greece, show signs of finally
turning a corner. The OECD
sees 1% growth for Greece this
year, not much but still the
best in 10 years and against a
backdrop of falling unemploy-
ment. The country last month
successfully returned to the
international bond market af-
ter having been locked out
since 2014.
Economic growth in the 19-
nation eurozone outpaced the
U.S. in the first quarter of the
year and kept pace in the sec-
ond quarter. Economic confi-
dence is at its highest level in
a decade, and unemployment
has fallen to an eight-year low
of 9.1%. Growth has broadened
beyond traditional power-
houses like Germany and the
WORLD NEWS
ratio to salesa metric that
measures marketing against
the ups and down of actual
revenuefell by 1.3 percent-
age points in the first half of
2017, compared with the pre-
vious six months, according
to RBC. Eight of Europes 10
biggest consumer-goods
firms lowered their ratio of
marketing to sales in the pe-
riod, averaging a drop of just
over half a percentage point.
It isnt just cost-cutting.
Packaged foods makers and
personal-care and household-
goods giants are facing com-
petition from new upstart
brands, many of which have
used social media and online
influencers to target con-
sumers. Some big companies
have tried to follow suit,
shifting their own advertising
focus to include these often
cheaper approaches.
The strategies have also
make up one-third of WPPs
salesare struggling with a
low-growth, low-inflation envi-
ronment, while some are con-
tending with activist investors
and technological disruptions.
Sales volumes at consumer-
goods companies are flat or
falling, Mr. Sorrell said.
Thats a big wake-up call. It
means you have less consum-
ers, and thats the beginning
of serious problems.
Among advertisers biggest
worries, he said, is the increas-
ing dominance of Amazon.com
Inc. over the traditional retail-
ers that distribute consumer
goods. If youre a packaged-
goods company and you want to
increase your volumes, do you
ignore Amazon or do you go to
them? And if you go to them,
they control your data, he said.
Despite the slowdown in
underlying revenue growth,
the group reiterated its target
for a 0.3-point improvement in
its operating margin. It also
raised its dividend to 22.7
pence (29 U.S. cents) from
BIST 100 Turkey
Merval Index Argentina
Athex Composite Greece
Hang Seng Index
Hong Kong
Warsaw Stock Exchange
Poland
Dow Jones
Industrial Average
M J J A
THE WALL STREET JOURNAL.
Netherlands: Spain notched its
best growth performance in
nearly two years in the second
quarter. France and Portugal
are both posting solid growth.
Jungheinrich AG, a German
maker of forklift trucks, is
benefiting from a very good
recovery in Spain and Portu-
gal, according to its chairman,
Hans-Georg Frey. The firm,
which makes four-fifths of its
revenue in Europe, recently
reported a 14% rise in net
sales for the first half of the
year. We are looking forward
to a positive second half, Mr.
Frey said.
In Italy, increased exports
up 8% from a year earlier in
Junehave helped push the
nations trade balance into
surplus. Italian engineering
firm CNH Industrial NV had
seen its sales slide by about a
quarter since 2014, but the
firm reported a 3% rise in
made it more difficult to jus-
tify big-budget, multimedia
campaignsthe sort of proj-
ects that made Madison Ave.
what it is todayto boost
flagging sales. The ad-spend-
ing falloff could be recogni-
tion that throwing money at
marketing isnt the panacea it
was, said RBC analyst James
Edwardes Jones.
Unilever earlier this year
said it planned to cut the
number of ads it created by
30% and reduce the number
of creative agencies it works
with by half.
Like its peers, the Anglo
Dutch maker of Dove soap
and Hellmanns mayonnaise
has been turning to YouTube
stars and beauty bloggers to
seed its products, diverting
some money from traditional
advertising channels.
Investors and analysts are
divided on whether the cuts
19.55 pence in the first half.
Investors, however, were fo-
cused on the lower 2017 out-
look, which showed the trou-
bles of the consumer-goods
sector are spilling into an al-
ready-weakened ad industry.
For years, the advertising
world has strained to deal
with the shift from traditional
advertising platforms, such as
print and TV, to digital. That is
now being compounded by
austerity among major adver-
tisers that are core to growth.
P&G, Nestl SA, Unilever
and Anheuser-Busch InBev NV
have all struggled to boost
growth. Those factors are
leading companies to put addi-
tional pressure on ad firms to
reduce the fees they pay for
services.
Woes across the consumer-
goods industry have given rise
to the practice of zero-based
budgeting, in which finance
managers plan each years
budget as if starting their de-
partment from scratchcon-
trary to the prevailing method
Growing In Sync
Number of major economies tracked by the OECD with:
Accelerating growth
45
40
35
30
25
20
15
10
5
0 ing stock prices. China relies
2007 08 09 10 11
Note: 2017 is a forecast based off rst and second quarter data for most countries
Source: OECD
sales for the second quarter,
to $6.9 billion, driven by
strength in Asia and Europe.
In many advanced econo-
mies, including the U.S., the
aftereffects off the financial
crisis are finally fading. Amer-
ican households have stopped
paring back their debt expo-
sures and started returning to
normal spending patterns. The
fiscal stance in many advanced
economies has shifted from
austerity to ease. And al-
though the Fed has begun to
raise its target interest rate,
most interest rates around the
world remain low and below
inflation rates.
The world is also benefiting
from a reversal from a global
commodity bust that began in
2014. New energy supplies,
such as from U.S. fracking,
combined with soft global
growth to send prices plung-
ing. Now, prices have firmed
and investment is picking up.
After the commodities bust
helped sink Brazil into its
deepest recession ever, it is
now forecast to expand 0.3%
this year and 2% in 2018. The
IMFs global price index for all
commodities is up 27% from
the start of 2016, and Brazils
crucial iron ore has seen
prices rise 37% off their re-
cent bottom.
That is feeding through to
the rest of the economy. MRV
Engenharia e Participaes SA,
Brazils largest builder of
homes for low-income fami-
lies, has launched 21% more
new projects in the first half
versus a year ago, said Chief
Financial Officer Leonardo
Guimares Correa. The coun-
try is moving from a down-
ward period to a period of re-
covery, Mr. Correa said.
Indonesian conglomerate
PT Astra International saw net
profit in its coal-mining sub-
sidiary jump 85% during the
Pulling Ads
Expenditures in advertising and promotion as a percentage of sales,
change from previous period*
Unilever
Heineken
P&G
Danone
Reckitt
Mondelez
AB InBev
Diageo
Nestl
Colgate
1.5 1.0
*Period changes are quarterly, except for Diageo which is full year, and Heineken,
Danone, Reckitt, Nestle which are half year. Mondelez is estimated.
Source: Credit Suisse
in spending are a response to
a new reality or a short-term
attempt to lift profit, which
could ultimately dilute big
brands.
At least one activist inves-
tor calling for change in the
sector thinks cutting back on
ads is the wrong approach.
of adjusting the previous
years spending.
Unilever, a proponent of
zero-based budgeting, said last
month in its first-half earnings
report that it plans a step-
up in brand and marketing
investment in the second half
of this year. Earlier this year,
the company had said it
planned to cut the number of
ads it created by 30% and re-
duce the number of creative
agencies it works with by half.
Mr. Sorrell said WPPs
weakest performance came
from the groups North Amer-
ica operations, pointing out
the uncertainty around the
economy and the Trump ad-
ministrations ability to carry
out its legislative agenda.
The enthusiasm has
waned, he said, adding that
businesses are concerned
about the administrations
ability to push through tax
changes after the failure of its
health-care push last month.
WPPs slowdown comes as
its closest competitors face
Slowing growth Contraction
12 13 14 15 16 17*
THE WALL STREET JOURNAL.
first half of the year, while its
maker of crude palm oil
booked a 26% year-on-year in-
crease in net profit. For the
rest of the year, we expect to
continue to benefit from the
[higher] coal and crude palm
oil prices, said Yulian War-
man, a spokesman for Astra
International.
While the global outlook
has bolstered U.S. stocks, in-
vestors in other countries
have benefited even more: In-
dexes in Turkey, Hong Kong,
Argentina, Greece and Poland
are all up more than 20% this
year, doubling the perfor-
mance of the Dow Jones In-
dustrial Average.
All the attention to the
U.S. election was covering up
how much the rest of the
world was improving, said
Adolfo Laurenti, global econo-
mist at the Swiss bank J. Safra
Sarasin.
Japans economy grew an
annualized 4% in the three
months through June, length-
ening its most recent stretch
of growth under Prime Minis-
ter Shinzo Abe to six quarters.
CORRECTIONS 
AMPLIFICATIONS
Congress revoked recently
an Obama-era regulation that
states had cited in part to re-
assure employers that state-
mandated retirement offerings
would be exempt from the fed-
eral law governing 401(k)-style
plans. A Finance & Markets ar-
ticle on Aug. 17 about state-
run retirement programs
wasnt clear about the status
of the regulation.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com.
THE WALL STREET JOURNAL.
0.5 0% 0.5
THE WALL STREET JOURNAL.
Last month, Nelson Peltzs
Trian Fund Management, now
a big holder of P&G stock,
criticized management for
reducing advertising, specif-
ically digital, a tactic we be-
lieve will damage the value of
the companys brands if con-
tinued in the long term.
similar headwinds. Publicis is
navigating a leadership transi-
tion and reported sales growth
of 0.2% in the second quarter,
far below its historical aver-
age. Omnicom reported better-
than-expected earnings, but
sounded a cautious note re-
garding the U.S. economy.
Last month, Interpublic, a
U.S.-based holding company
that owns agencies including
McCann Worldgroup and IPG
Mediabrands, said spending
cuts by consumer packaged-
goods clients reduced its reve-
nue in its latest quarter by 1%.
WPP on Wednesday said
first-half profit before interest
and tax rose 15% to 882 mil-
lion ($1.13 billion). Reported
revenue rose 13% to 7.4 bil-
lion for the period, lifted by
favorable exchange rates to
the Brexit-weakened pound.
Net profit more than doubled
to 596 million from 246 mil-
lion after one-time costs a
year earlier werent repeated.
Lara OReilly
contributed to this article.
Consumer spending is helping
drive growth; Nissan Motor
Co. saw its Japan sales rise by
46% year-to-year in the June
quarter thanks to the popular-
ity of a minivan equipped with
autonomous driving tools.
The three other periods in
the past 50 years with syn-
chronized growth saw the
trend continue for a few years.
In the end, however, those ex-
pansions became overextended
and ended.
Some signs of froth are
popping up now, beyond soar-
increasingly on its property
market for growth. Despite the
governments recent crack-
down on speculative home
purchases, persistent demand
for property has boosted pro-
duction and sales of construc-
tion material, furniture and
other items. Astronomical
property prices are causing
many consumers to tighten
their purse strings.
Yet broader inflation is low
world-wide, which will give
central bankers an opportu-
nity to proceed slowly in pull-
ing back stimulus. It will
make for easier breathing in
the thin air of Jackson Hole,
after years of hand-wringing
and crisis management about
the prospects for the global
economy.
Tom Fairless in Frankfurt,
Grace Zhu in Beijing, Luciana
Magalhaes in So Paulo and
Megumi Fujikawa in Tokyo
contributed to this article.
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 THE WALL STREET JOURNAL.
In Mideast,
Even Talks
Are Elusive
Jared Kushner to meet
separately with Israelis,
Palestinians in search
of path to negotiations
President Donald Trump,
who has pledged to broker the
ultimate deal between Israe-
lis and Palestinians, faces ma-
By Rory Jones in Tel
Aviv and Paul Sonne
in Washington
jor obstacles to getting them to
even negotiate, as his son-in-
law and adviser Jared Kushner
arrives in Israel this week.
The White House says the
discussions will focus on the
path to substantive Israeli-Pal-
estinian peace talks, combating
extremism and economic and
humanitarian issues in the Pal-
estinian territories of the West
Bank and Gaza Strip. Mr. Kush-
ners delegation is set to meet
with Israeli and then Palestinian
officials separately on Thursday.
But the U.S. hasnt received
assurances that the two sides
will talk to one anotherlet
alone take steps to resolve the
decadeslong conflict. A White
House official emphasized that
the U.S. is still in the initial
Airstrikes Said to Kill Dozens Near Yemeni Capital
KHALED ABDULLAH/REUTERS
Houthi rebels in Yemen said
airstrikes by a Saudi-led military
coalition near the capital on
Wednesday killed and wounded
at least 71 people, including
more than 35 dead at a hotel, in
the latest surge of violence in
the nearly 2-year war.
There was no independent
confirmation of the Houthi claims.
A spokesman for the coalition,
which is fighting to unseat the
rebels from the capital Sana and
restore the internationally backed
government of President Abed
Rabbo Mansour Hadi to power,
didnt reply to a request for com-
ment about the allegations.
Abdulgoddoos al-Shahary, an
Saudis Open Iraqi Border, Forge Ties to Counter Iran
BY MARGHERITA STANCATI
ARAR, at the Saudi Arabia-
Iraq BorderSaudi Arabia,
with U.S. assistance, is push-
ing aside years of rancor with
its neighbor Iraq and mount-
ing a broad effort to win
Baghdads allegiance and di-
lute Irans influence over the
pivotal U.S. ally.
Saudi authorities are court-
ing Iraqs Shiite leaders, ex-
panding the kingdoms diplo-
matic presence, opening direct
flights and reopening crossings
closed for decades on the heav-
ily fortified, 600-mile border.
We share historical, cul-
tural and social links with
Iraq, Thamer al-Sabhan, minis-
ter of state for Gulf affairs, said
after stopping at the newly re-
opened Arar border crossing.
If anything, I think we should
be moving even faster.
The shift provides a politi-
cal and economic lift to the
Iraqi government as it drives
Islamic State from the country
and moves to rebuild.
For Washington, it is part
of a push to align Iraq a little
more toward the Saudi Ara-
stages of the process and has
yet to formally propose a new
peace dialogue.
The Palestinians quest for
statehood is among the biggest
hurdles to direct negotiations.
Many Israeli officials wont
support the creation of a Pales-
tinian state; Palestinian officials
dont want to negotiate without
statehood as the goal. The
White House hasnt said how it
plans to bridge the gap, say Is-
raeli and Palestinian officials.
The deadlock underscores
the tough task Mr. Trump faces
in forging Middle East peace
a signature foreign-policy goal
that has eluded American lead-
ers for decades. Mr. Trump in
February backed off the U.S.s
longstanding commitment to a
two-state strategy, saying he
would support whatever solu-
tion both parties prefer.
Mr. Trump has deputized
Mr. Kushner, a 36-year-old for-
mer real-estate developer with
no experience negotiating for-
eign conflicts, to spearhead
the peace efforts.
In leaked comments from a
meeting with congressional in-
terns, Mr. Kushner said there
may be no solution to the
conflict but said he would try
because it was one of the
problem sets the president
official at Yemens Houthi-con-
trolled information ministry, said
at the time of the airstrikes
there was no fighting in the
area around the hotel, 14 miles
north of the capital.
Mr. al-Shahary said the hotel
was frequented by sellers of
khat, and most of the dead were
children accompanying their fa-
thers to buy the leaf, which is
chewed by many Yemenis as a
stimulant, and transport it for
sale in the capital.
Above, people carried the
body of a man they recovered
from the site of the airstrikes.
In June, the United Nations
said it had recorded almost
bias and Turkeys of the
worldand to blunt a little bit
the Iranian influence, said a
U.S. official, who described
Saudi-Iraqi friendship as a pri-
ority for the Trump adminis-
tration. Its never too late.
The U.S.-led coalition
against Islamic State, which
includes Saudi forces, has
fought on the same side as
Iran against the Sunni extrem-
ist group. Success in largely
vanquishing the group, also
known as Daesh, creates an
opportunity for the coalition
allies to gain leverage in Iraq.
We have been focused over
the last three years not only
on defeating Daesh, but on
what comes after Daesh,
Brett McGurk, the U.S. envoy
to the coalition fighting Is-
lamic State, said at the border
with Mr. Sabhan.
We will do everything we
possibly can to support your
effort, he told Iraqi and Saudi
officials gathered there.
Relations, and the Saudi-
Iraqi border, were shut down in
1990 after Iraqi leader Saddam
Husseins invasion of Kuwait.
The Saudi monarchy kept its
WORLD NEWS
Israeli soldiers ran during clashes with Palestinian protesters in a West Bank village on Friday.
asked us to focus on.
Mr. Kushners team will also
meet with leaders from Saudi
Arabia, the United Arab Emir-
ates, Qatar, Jordan and Egypt
over the peace process and
other issues.
Palestinian officials said
they were initially encouraged
by Mr. Trumps eagerness to
get a deal done, but now say
they are disappointed with his
administrations early steps.
Palestinian Authority Presi-
dent Mahmoud Abbas on Sun-
day told a group of left-wing
Israeli lawmakers that he had
met 20 times with Trump ad-
ministration officials but still
had no clear idea on its direc-
5,000 civilian casualties since
the Saudi-led, U.S.-backed coali-
tion intervened in Yemen in
March 2015. The U.N. and inter-
national human-rights groups
say the coalition has been re-
sponsible for many of them and
have urged it to differentiate be-
tween civilian and military tar-
gets. The coalition has denied
deliberately targeting civilians.
The coalition captured the
southern city of Aden from the
Houthis in 2015, and has ex-
pelled the group from other ar-
eas of southern and central Ye-
men. But the rebels have
managed to hold Sana.
Mohammed al-Kibsi
Opening Doors
Saudi and Iraqi authorities have opened their long-closed border at
Arar and agreed to open another crossing at Jumaima. Iran and Iraq
have eight open crossings.
SYRIA
IRAQ
Baghdad
Najaf
JOR. Arar
Jumaima
SAUDI
EGYPT
ARABIA
Re
dS
e
Mecca
a
SUDAN
back turned on its northern
neighbor in the years of war
and instability that followed
Saddams fall in 2003, leaving
Iran to expand its sway through
Iraqs government, the power-
ful militias and the economy.
A new Saudi leadership is
driving the shift, part of the
tion for peace.
The U.S. is not willing to
say that the Palestinians ba-
sis for negotiation is the es-
tablishment of a state, said Es-
awi Freij, an Israeli lawmaker
who met with Mr. Abbas.
The White House official
said the administration has
developed a strategy that it
will begin discussing with the
relevant parties this week.
The president remains op-
timistic, the official said.
Disagreements over West
Bank settlement housing also
are roiling the waters. Since Mr.
Trump took office, Israeli Prime
Minister Benjamin Netanyahu
has issued a significant increase
ARAMCO
Continued from Page One
be harder to sell their own
companies.
Selling state-owned assets is
a relatively new phenomenon
in the Middle East, where gov-
ernments own great chunks of
the economy. Global fund man-
agers have lacked a direct way
to get exposure to the Middle
Easts oil industry, and this will
bring new options for those
funds looking to put money
into the global energy sector.
But investors also worry
about geopolitical tensions in
the region, particularly given
the growing rift between Qa-
tar and its neighbors.
Tim Love, an investment di-
rector at GAM Holding, would
usually invest roughly 5% of
his emerging-market equity
portfolio in the Middle East.
Currently, it is at around 1%.
Wed be more than happy
to exploit opportunities in the
Middle East just as and when
geopolitical risks subside, he
said, adding that there were
better risk-return opportuni-
ties elsewhere.
Aramcos IPO is slated for
2018. Estimates of the com-
panys value have ranged from
less than $500 billion by some
analysts to Saudi Arabias own
$2 trillion price tag.
The coming IPO, first an-
nounced in 2016, has influ-
enced other countries to look
at listing their own assets, ac-
cording to company and state
300 miles
300 km
IRAN
KUWAIT
er
P
si
an
Gul
f have agreed to open a second
Riyadh U.A.E.
OMAN
THE WALL STREET JOURNAL.
intensified efforts by King Sal-
man and Crown Prince Mo-
hammed bin Salman to coun-
ter Iranian influence across
the region.
Iraq Prime Minister Haider
al-Abadi has welcomed the
counterweight to Iran. The
Saudi outreach comes as he
Thursday, August 24, 2017 | A3
in construction tenders for such
housing and agreed to build the
first new stand-alone settle-
ment in more than 20 years.
In a meeting in February
with Mr. Netanyahu, Mr.
Trump asked the Israeli leader
to halt settlements. But White
House officials also have re-
frained from condemning them
when they are announced, in
contrast with the Obama ad-
ministration which frequently
did. Mr. Trump appointed Da-
vid Friedman, his longtime
lawyer who has financially
supported settlements, as U.S.
ambassador to Israel.
The Trump administration
has made clear that unre-
officials. The Aramco IPO is
definitely making several com-
panies in the Gulf rethink their
strategy, said a senior Oman
government oil official.
Listings would boost the
Omani stock exchange while at-
tracting more foreign investors
to the country, the official said.
Adnoc is expected to be first
in line. The company is sched-
uled to list its retail business,
which controls gasoline sta-
tions and convenience stores,
A Push Higher
IPOs by companies
in the Middle East
40 IPOs
30
20
10
0 the help of private invest-
2013 14 15 16 17*
*Through Tuesday Source: Dealogic
THE WALL STREET JOURNAL.
later this year in an IPO that
could raise as much as $1.5 bil-
lion to $2 billion, according to
an official at the company.
Local governments had lit-
tle reason to look for outside
funding for their lavish spend-
ing plans when the oil price
was above $100 a barrel be-
tween 2011 and 2014.
But increased crude from
the U.S. and elsewhere sent the
battles a political rival who is
close to Tehran, former Prime
Minister Nouri al-Maliki,
ahead of parliamentary elec-
tions next year.
The first of around 140
flights connecting Baghdad,
Riyadh and other cities each
month are set to start in the
coming weeks, Saudi and Iraqi
officials said.
The border crossing at Arar
was reopened this month for
trade and travelers, in time for
Iraqis to make the annual hajj
pilgrimage to Mecca. Officials
crossing next year.
The U.S. has been a broker
in the rapprochement. Soon
after the start of his tenure in
February, Secretary of State
Rex Tillerson sought to per-
suade his Saudi counterpart,
Adel al-Jubeir, that the king-
dom should carve out a bigger
role for itself in Iraq, a U.S. of-
ficial said.
Days later, on Feb. 25, Mr.
Jubeir flew to Baghdad, the
first visit by a Saudi foreign
minister in decades. The trip
marked a turning point. In
June, Mr. Abadi made an offi-
MOHAMAD TOROKMAN/REUTERS
strained settlement activity
does not advance the prospect
for peace, the White House
official said. At the same
time, the administration rec-
ognizes that past demands for
a settlement freeze have not
helped advance peace talks.
Israeli officials have said
they dont believe settlements
are an impediment to peace or
the establishment of a Pales-
tinian state.
Israeli politics also is play-
ing a role. Members of Mr. Ne-
tanyahus government have
warned against entering peace
talks based on a two-state so-
lution at risk of destroying the
governing coalition.
price into a long period of de-
cline, culminating in it trading
below $30 a barrel in early
2016. Wednesday, Brent oil fu-
tures, the international bench-
mark, were at $52.57 a barrel.
Moodys Investors Service
estimates that oil accounts for
about 25% of gross domestic
product in Gulf Cooperation
Council countries and about
two-thirds of government rev-
enue.
The reality is oil prices are
unlikely to recover signifi-
cantly and not only are gov-
ernments trying to diversify,
but theyre also trying to pri-
oritize key investments in crit-
ical sectors, said Mustafa An-
sari, energy economist at
development bank Arab Petro-
leum Investments Corp.
Governments are trying to
diversify their economies
away from energy by moving
into financial services, chemi-
cals and even manufacturing.
They cant do this without
ment, Mr. Ansari said.
Around two years ago, these
countries began turning to
bond markets to raise cash.
That included Saudi Arabias
$17.5 billion bond sale last Oc-
tober. GCC members raised
$38.9 billion from bond sales
last year, and a further $32.5
billion of new paper is expected
to be issued by the end of this
year, according to Moodys.
Bankers say IPOs are a natu-
ral follow-on. Bonds can be ar-
ranged and sold quickly. A list-
ing can take months, sometimes
years, to bring to market.
cial visit to the kingdom, dur-
ing which the two sides
agreed to set up a joint coun-
cil to upgrade ties in areas
from security to trade.
Then, at the end of July,
Iraqi cleric and Shiite leader
Moqtada al-Sadr met with
Crown Prince Mohammed in
Saudi Arabia. Until recently that
would have been unthinkable:
The cleric had repeatedly railed
against the Sunni kingdom.
Saudi Arabia is now seeking
to expand its diplomatic pres-
ence across Iraq. The first new
consulate, in Najaf, the spiri-
tual and academic heartland of
Shiite Islam, is likely to open
in the next two months, Saudi
and Iraqi officials said. More
are set to open.
Saudi companies including
oil giant Aramco are looking
into opportunities for invest-
ment in Iraq. The Saudi dairy
Almarai is considering produc-
ing animal feed in the impov-
erished border province of
Muthanna, Saudi and Iraqi of-
ficials said.
Ali Nabhan, Ghassan
Adnan and Asa Fitch
contributed to this article.
A4 | Thursday, August 24, 2017 HK JP KO ML SI IN UK FR MN PR THE WALL STREET JOURNAL.

WORLD NEWS

Rising Star Clouds U.S. Plan for Pakistan

Imran Khan, a critic of West for its efforts.
To expect Pakistan to do
American policy, gains more killing on behalf of the
political clout after the Americans is not an option we
should take. I think we have
ouster of Nawaz Sharif already suffered enough in this
country, Mr. Khan said in an
BY SAEED SHAH interview. Its not really an al-
liance. Basically America pays
ISLAMABADPresident Pakistan to do its dirty work.
Donald Trumps efforts to re- Mr. Khan, 64 years old, said
boot U.S.-Pakistan relations as the antiterror partnership
part of his new Afghanistan with Washington has caused
talks with the Pakistani Tali-
ban.
Pakistans leadership has
long complained that the U.S.
approach to the region doesnt
take into account its security
fears and doesnt acknowledge
Pakistans efforts to root out
terrorists. Yet the political and
military consensus has been to
continue accepting U.S. aid
and maintain some level of co-
operation with U.S. efforts in
outskirts of Islamabad. Ideol-
ogy had disappeared from pol-
itics. It was just a question of
who could offer more money.
Thats how Nawaz Sharifs pol-
itics prospered.
Mr. Khans critics, however,
accuse him of receiving sup-
port from the military, an alle-
gation he and the armed
forces deny.
Mr. Khans party promises
clean government and better

CAREN FIROUZ/REUTERS
strategy face a potential chal- disaster in Pakistan by spark- Afghanistan. public services, a message that
lenge because of the rising ing a violent backlash at home. Mr. Sharif, the three-time resonates with the more edu-
fortunes of a popular politi- He has called for a phased prime minister dismissed by cated segment of Pakistans
cian who is a fierce critic of withdrawal of U.S. troops from the Supreme Court last month, emerging middle class.
U.S. policy. Afghanistan and U.S. talks faces a corruption trial over The electoral impact of Mr.
Pakistans political path with the Taliban. Mr. Khan family property holdings in Sharifs removal could become
took a twist in recent months Mr. Khan advocates a break with the U.S. antiterror alliance, said that the Taliban, rather London. He has denied any clearer next month in a by-
with the ascendancy of charis- spurning aid he has said comes at too high a cost to his country. than a Pakistan-sponsored wrongdoing. His Pakistan Mus- election over his vacated par-
matic sports-star-turned-poli- group, is an indigenous move- lim League-N (PML-N) party liamentary seat in his home-
tician Imran Khan. The fervent thrust Mr. Khan and his Teh- at odds with Washingtons new ment, driven by opposition to remains in office. Political an- town of Lahore. There, Mr.
opponent of the U.S. war on reek-e-Insaf (PTI) party into Afghanistan strategy of send- the U.S. presence and the col- alysts said Mr. Sharifs trial, Khans party is fielding a mid-
terror used the courts to oust real contention in elections ing in more soldiers and pres- lateral damage that it causes, due to begin within weeks, dle-class professional
Prime Minister Nawaz Sharif due within the next year. suring Pakistan to take action so the solution is not by tell- will likely provide a regular womanthe embodiment of
in July and is looking to use Mr. Khans surge is already against insurgents that use its ing Pakistan to do more. drip of bad news for his party, the partys crusade against dy-
the momentum from that legal shaping the political terrain soil as a sanctuary. Mr. Khan Even now, long before the which is built around him and nastic politics. Against her is
victory to propel him to by, among other things, push- views the war on terror as the election, Mr. Khans growing his family. Mr. Sharifs wife, Kulsoom,
power. ing opinion in Pakistan more U.S.s war, not Pakistans fight. influence has the potential to Mr. Khan, meanwhile, has who has never served in Par-
Mr. Khan has been on the sharply against the countrys And he has said the U.S. is shape Pakistans stance on is- touted the ouster as a major liament before.
political scene for two decades close security ties to the U.S. blaming Pakistan for what he sues of high importance to the advance for democracy in Pak- Mr. Khan said he aims to be
leading a small but vocal party He advocates a sharp break calls its deeply flawed and U.S.: Afghanistan policy, India istan because it was a court a prime minister like Lee Kuan
opposed to what he views as with the U.S. antiterror alli- failed Afghan policy. relations and Islamabads atti- and not the military that Yew in Singapore or Mahathir
the crooked political dynasties ance, spurning aid that he has Mr. Khan has argued that tude to terrorist groups U.S. pushed Mr. Sharif from office. Mohamad in Malaysiaa
of Mr. Sharif and the other es- said comes with conditions far from harboring terrorist officials say operate from This is the biggest step to- leader whose vision trans-
tablished party. that have proved too costly for groups, Pakistan has fought a within Pakistan. wards democratic evolution, forms a nation because we
Mr. Sharifs removal has Pakistan. costly battle against them and In 2014, Mr. Khan forced Is- said Mr. Khan, speaking at his saw in our own lifetimes how
weakened the ruling party and Mr. Khans stance puts him received little credit from the lamabad to attempt peace serene hilltop home on the these countries changed.

Trump Ramps Up Pressure on Islamabad German

The Trump administration
on Tuesday outlined steps it is
prepared to take to raise pres-
Candidate
sure on Pakistan to stop har-
boring extremist groups, in-
cluding sanctions on govern-
Hits U.S.
By Felicia Schwartz in
Washington and Saeed
Arsenal
Shah in Islamabad, BY ANTON TROIANOVSKI
Pakistan
BERLINThe center-left
ment officials, ramping up U.S. candidate for chancellor in Ger-
drone strikes in the country, manys September election de-
and further cutting aid. manded that U.S. nuclear weap-
The effort comes as a cen- ons be withdrawn from the
terpiece of a new strategy en- country, taking an increasingly
compassing Afghanistan and anti-American tack in a cam-
South Asia. President Donald paign season overshadowed by
Trump announced Monday that the European discontent with
the U.S. would expand its mili- President Donald Trump.
tary presence in Afghanistan. Martin Schulz of the Social
But experts and former offi- Democrats, the challenger to
NIKOLA SOLIC/REUTERS

cials with experience in the re- incumbent Chancellor Angela

gion question whether it will Merkel, said Wednesday that
be any more successful than the upper limit for nuclear
its forerunners, and Pakistani weapons in our country must
officials already are chafing be zero. He was elaborating
under new U.S. demands that on comments he made at a
come without the recognition The Trump administration is turning up the heat on Islamabad. A U.S. Army sniper near the Pakistan border in Afghanistan in 2011. campaign rally in southwest
they want of Islamabads past Germany on Tuesday at which
efforts. Pakistan would be to gradually Under the Obama administra- Trump and other senior officials have put people on notice that if he promised that, as chancellor,
Secretary of State Rex Til- withhold some security and tion, the U.S. tried a mix of car- echoed past promises to in- youre harboring and providing he would work to make sure
lerson said a variety of tactics economic assistance. That rots and sticks, including creat- crease pressure on Pakistan, said safe haven to terrorists, be that nuclear weapons stored in
would be considered if Paki- could be followed up by sanc- ing strategic dialogues and Joe Collins, director of the Cen- warned, he said, when asked if Germany be withdrawn.
stans leaders are unwilling to tions, first on targets in the boosting military aid, before ter for Complex Operations at the administration was planning Donald Trump also de-
change their posture or militant organization known cutting back on support as it National Defense University. strikes in Pakistan as part of the mands a nuclear arms build-
change their approach to how as the Haqqani network, which grew frustrated with Pakistans How many times have we new strategy. up, Mr. Schulz said. We will
theyre dealing with the nu- supports the Afghanistan Tali- harboring of militant groups. said were going to put more Pakistan, a U.S. ally for de- oppose this.
merous terrorist organizations ban, and possibly extending to Former officials and experts pressure on Pakistan, and then cades, has been exploring al- The new demand repre-
[that] find safe haven inside of Pakistani government officials said the Trump administrations we dont? he said. ternative alliances in recent sented one of Mr. Schulzs
Pakistan. who are found to be support- fresh bid to turn up the heat on Since 2014, the U.S. has cut years. The new pressure on most ambitious attempts yet
Obviously, we have some le- ing the terrorist network. Pakistan is unlikely to convince the amount of economic and se- Pakistan, as well as a renewed to leverage German opposition
verage thats been discussed in Pakistani officials say they its government to deny a haven curity assistance Pakistan re- U.S. tilt toward India that Mr. to Mr. Trump into an electoral
terms of the amount of aid and are being blamed unfairly for to the Haqqani network. ceives by half, under policies by Trump stressed in Mondays advantage as he trails Ms.
military assistance we give the failures of American policy Even under conditions the Obama administration. speech, is likely to drive Islam- Merkel by double digits in the
them, Mr. Tillerson told re- in Afghanistan and deny that where I had nearly 150,000 Mr. Tillerson also raised the abad deeper into a growing polls. While the Social Demo-
porters at the State Department they are harboring insurgents. troops in Afghanistan and possibility of ramping up U.S. partnership with China, which crats have often been more
on Tuesday. He said Pakistans Past U.S. administrations worked closely with the Paki- drone strikes in Pakistan, oper- has shown an increased will- critical of the U.S. than Ms.
status as a major non-North At- have struggled over how to bal- stanis on cross border opera- ations which have been a point ingness to provide support to Merkels center-right Christian
lantic Treaty Organization ally ance security cooperation with tions, they were usually luke- of tension between Washing- Pakistan, analysts said. Democrats, they have long
of the U.S. also could be put on urging Islamabad to suppress warm at best in their efforts to ton and Islamabad in recent Pakistans foreign minister, supported the trans-Atlantic
the table. extremist groups. The George W. do that, said retired Gen. John years, but have dwindled in Khawaja Muhammad Asif, said alliance. It was a Social Demo-
A senior Trump administra- Bush administration boosted aid Allen, a former commander of number. So far in 2017, the U.S. Tuesday that U.S. money cratic chancellor, Helmut
tion official said the U.S. also to Islamabad after 2001, but the International Security Assis- has conducted four drone wouldnt determine the coun- Schmidt, who backed a West-
is considering slapping sanc- then-Vice President Dick Cheney tance Force in Afghanistan. strikes in Pakistan. The num- trys antiterrorism battle. ern plan during the Cold War
tions on Pakistani officials made a secret trip in 2007 to Pakistan may not change, but ber peaked in 2010, when the We can survive without to base U.S. nuclear-tipped
found to be aiding terrorists. press then-President Pervez Mu- the president is right to seek a U.S. carried out 122. that, said Mr. Asif. Were not missiles in Germany should
The official said the admin- sharraf to do more to crack change in Pakistans behavior. Were going to attack terror- fighting this war with their disarmament talks with the
istrations first move to press down on militants. The strategy outlined by Mr. ists wherever they live and we money. Soviet Union fail.
The U.S. keeps nuclear war-
heads in five European coun-

Danish Sub Inventor Is Arrested in Reporters Death tries, including Germany, ac-
cording to the Federation of
American Scientists and the
Congressional Research Ser-
Associated Press vice. The U.S. military has a
policy of not commenting on
COPENHAGEN, DenmarkA the location of its nuclear ar-
mutilated body found on a senal in Europe, and German
TT NEWS AGENCY/REUTERS (LEFT); JENS DRESLING/AP

beach off Copenhagen has officials Wednesday also de-

been identified as that of clined to comment on the
missing Swedish journalist presence of U.S. nuclear weap-
Kim Wall, who is believed to ons in the country. About 150
have died on an amateur-built B61 nuclear bombs are stored
submarine this month, Danish at six European bases, accord-
police said Wednesday. ing to FAS.
Ms. Wall, 30 years old, was Mr. Trump has said he
last seen alive on Aug. 10 on wants to renovate and mod-
Danish inventor Peter Mad- ernize our nuclear arsenal. A
sens submarine, which police broad overhaul of U.S. nuclear
believe he intentionally sank weapons systems has been un-
off Denmarks eastern coast der way for half a decade.
the following day. A spokeswoman for Ms.
Mr. Madsen, 46, was ar- Kim Wall, above, was last seen alive on inventor Peter Madsens UC3 Nautilus, right. Mr. Madsen said an accident occurred onboard. Merkel signaled Wednesday
rested on preliminary man- that the chancellor wouldnt be
slaughter charges. Ms. Walls Amager island. Police said her Dried blood belonging to Ms. and that he didnt know what that he didnt kill Ms. Wall. echoing Mr. Schulzs demand.
family said the freelance jour- head, arms and legs had de- Wall was found inside the sub- happened to her afterward. He Mr. Madsen made headlines While Ms. Merkel wants to see
nalist was working on an arti- liberately been cut off. marine, he said. later told authorities an acci- when he launched the 40-ton, a nuclear-weapon-free world,
cle about Mr. Madsen. Copenhagen police investi- Mr. Madsen, who is in po- dent occurred onboard that nearly 60-foot-long sub, there continues to be a need
The body was found Mon- gator Jens Moeller Jensen said lice custody, initially told in- led to her death and he bur- named the UC3 Nautilus, on for nuclear deterrence as long
day on a beach by a member the torso was attached to a vestigators Ms. Wall disem- ied her at sea. May 3, 2008. It is described as as other countries see nuclear
of the public who was cycling piece of metal likely with the barked from the submarine Mr. Madsens defense law- the worlds largest privately weapons as a means of military
on Copenhagens southern purpose to make it sink. several hours into their trip yer said her client maintains built submarine. conflict, the spokeswoman said.
 THE WALL STREET JOURNAL. Thursday, August 24, 2017 | A5

WORLD NEWS

Fleet Commander
Is Relieved of Duty
BY GORDON LUBOLD
WASHINGTONThe U.S.
Navy removed the commander
of the fleet that has suffered
four recent collisions in Asia
and the deaths of several sail-
ors, the Pacific Fleet said in a
statement.
The Wall Street Journal re-
ported Tuesday that the Navy
KCNA/KNS/AGENCE FRANCE-PRESSE/GETTY IMAGES
MC, as the McCain headed for
a port visit in Singapore. A
search-and-rescue operation
had been under way for 10
missing sailors. Navy officials
said Tuesday that some re-
mains have been found but
that the operation continues.
That accident followed the
destroyer USS Fitzgeralds
June 17 collision with another

was planning to remove Vice commercial ship, killing seven

Adm. Joseph Aucointhe
three-star commander of U.S.
Seventh Fleet in Yokosuka,
Japanthough officials had
declined to comment.
In a short statement
Wednesday, the Navy said
Adm. Scott Swift, the com-
mander of U.S. Pacific Fleet,
had relieved him due to a loss
of confidence in his ability to
command.
North Korean leader Kim Jong Un visits the Chemical Material Institute of the Academy of Defense Science, in an undated photograph. Vice Adm. Aucoin was ex-
sailors.
The Navy said last week
that the Fitzgeralds com-
manding officer, the ships ex-
ecutive officer and the senior
enlisted sailor on the ship all
had been relieved of their
command. The cause of the
two fatal collisions are un-
known and investigations con-
tinue into each, defense offi-
cials said.
Two other accidents within

Pyongyang Restraint Wanes

pected to retire in coming U.S. Seventh Fleets area of re-
weeks, but under the Navys sponsibility occurred earlier
tradition of public account- this year. In May, the guided
ability, commanders or ship missile cruiser USS Lake
captains are dismissed as Champlain collided with a
soon as their superiors lose South Korean fishing vessel,
BY JONATHAN CHENG fire any missiles between Oc- launched a land-based ver- the U.S. should continue to confidence in their leader- and in January, another
tober and February, according sion of the solid-fuel missile, pursue diplomacy with ship. cruiser, the USS Antietam, ran
SEOULHours after U.S. to a database compiled by the known as the Polaris-2. Solid- Pyongyang, and encourage His removal doesnt repre- aground near its port in Yoko-
Secretary of State Rex Tiller- James Martin Center for Non- fuel missiles, unlike tradi- any signs of progressin- sent a specific finding of fault suka.
son praised him for exercis- proliferation Studies. But af- tional liquid-fueled ones, cluding the recent dearth of against Vice Adm. Aucoin. Vice Adm. Aucoin, a naval
ing restraint, North Korean ter that relatively long hiatus, dont need to be fueled on the missile tests. Navy officials are investigating flight officer, received his
leader Kim Jong Un appeared North Korea test-launched 14 launchpada laborious pro- North Korea hasnt the role that training, manning commission in 1980 through
in state media visiting a mis- missiles in a little more than cess that makes the weapon launched a missile in 26 days, and other internal fleet pro- the North Carolina State Uni-
sile-development factory and five months, including two in- vulnerable to a pre-emptive although the launch of its cesses may have played in the versity Naval Reserve Officers
ordering the production of tercontinental ballistic mis- strike. first ICBM on July 4 came af- collisions. Training Corps program there,
more warheads and rocket siles and other shorter-range Pyongyangs release of ter a 35-day pause. The Navy said Monday that and was designated a naval
engines. missiles that demonstrated photos indicating yet two North Korea has shown it would impose a rare opera- flight officer the next year. He
Mr. Kims visit, the date of new capabilities. more new missiles in devel- glimmers of restraint for tional pause across the globe served on a number of aircraft
which wasnt disclosed by opment shows it has no in- now, and the U.S. seeks to en- following the accidents, all carriers as a pilot and as a
Pyongyang in its report on tention of halting its continu- courage morebut is ready within Seventh Fleets waters. commander and held other
Wednesday, underscores ing quest to threaten the U.S. to move in the opposite di- Those include the collision jobs at the Pentagon.
North Koreas continued in-
Photos appeared to and its allies with nuclear rection as well, Mr. Cronin on Monday of the destroyer He became Seventh Fleet
vestment in its ability to show diagrams of at weapons, said Bruce Kling- said. USS John S. McCain with a commander in September
threaten the continental U.S. ner, senior research fellow During Mr. Kims visit to commercial vessel, the Alnic 2015, according to the Navy.
with a nuclear-tipped long-
least two never- for Northeast Asia at the Her- the Chemical Material Insti-
range missile. before-seen missiles. itage Foundation. tute of the Academy of De-
At a Tuesday news briefing A two-week adherence of fense Science, he learned
in Washington, Mr. Tillerson North Korea to U.N. prohibi- about missile technology and
said he was pleased to see tions against missile tests gave instructions to the sci-
that the regime in Pyongyang Photos published alongside hardly counts as a significant entists there to produce
has certainly demonstrated Wednesdays report by the of- indicator of benign intent by more solid-fuel rocket en-
some level of restraint that ficial Korean Central News the regime, he added, refer- gines and rocket warhead
we have not seen in the past, Agency showed Mr. Kim and ring to the United Nations Se- tips, according to the ac-
TREFOR MOSS/THE WALL STREET JOURNAL
referring to its abstention in other officials standing in curity Councils newest round count published by KCNA.
carrying out missile tests or front of diagrams. Missile ex- of sanctions this month. The institute is charged
other acts of aggression. perts said the diagrams ap- The missile-building pro- with making warhead tips for
But even when the regime peared to show at least two gram is unstinting, said Pat- long-range missiles and solid-
hasnt been actively test- never-before-seen missiles, rick Cronin, senior director of fuel rocket engines.
launching missileswhich the including one that looked to the Asia-Pacific Security Pro- Mr. Kim was accompanied
U.S. terms provocationsit be a variant of a solid-fuel gram at the Center for a New on his visit by Kim Jong Sik,
has been making rapid head- missile that North Korea American Security. Diplo- a major general in the rocket
way on its weapons technol- launched from a submarine macy cannot touch that for command and a confidante of
ogy. last year. now. Kim Jong Un, to whom he
North Korea didnt test- Pyongyang in February But Mr. Cronin argued that isnt related.
One of 3 Kia plants in Yancheng that together employ 30,000.

WORLD WATCH
VENEZUELA some places waves flooded sea- The storm also caused a lion in military aid on hold be-
Korea-Goods Boycott
Ex-Top Official Claims
Proof of Corruption
side streets.
There were reports of 34
people injured in Hong Kong
blackout across most of the gam-
bling hub of Macau for about two
hours, residents said, with disrup-
cause of unhappiness over
Egypts human-rights situation, a
State Department official said.
Hits Workers in China
while in the city of Macau, tion to mobile phone and internet Washington also wants to BY TREFOR MOSS thing to happen to it.
Venezuelas ousted Attorney across the Pearl River estuary, networks. There was severe pressure Cairo on its ties with Sales of Korean goods in
General Luisa Ortega said on three people were killed, authori- flooding on the streets, with North Korea, a person familiar YANCHENG, ChinaThis China have been in sharp de-
Wednesday she has proof of ties there said. some cars almost completely with the decision said. prosperous city of 1.6 million cline since March. Although no
corruption involving top govern- In Hong Kong, more than 450 submerged, and the water supply The $195 million in withheld north of Shanghai is a factory boycott has been declared,
ment officials and is sharing it flights were canceled, financial was affected in some districts. funds wont be disbursed until town for South Korean auto state-controlled media has en-
with the U.S. and other coun- markets were suspended and Reuters the U.S. sees progress from maker Kia Motors Corp.and couraged the campaign in re-
tries. schools closed as Hato bore Egypt on key priorities, said the a reminder that in a globalized taliation for Seouls deploy-
Ms. Ortega said documents in down, the first category-10 EGYPT State Department official, who world, Beijing cant punish ment of an American-made
her possession show at least storm to hit the city since 2012. declined to specify what Cairo foreign companies without missile-defense system for
$100 million deposited irregu- In residential districts such as Cairo Slams U.S. must do to get the aid resumed. sacrificing Chinese workers North Koreas nuclear-weap-
larly into accounts tied to Vene- Heng Fa Chuen on densely popu- For Withholding Aid Egypts Foreign Ministry criti- and business partners, too. ons program.
zuelas President Nicols Maduro lated Hong Kong island, waves cized the measures as harmful to Chinas unofficial campaign Many Chinese consumers
and other officials. smashed against the sides of Egypt lashed out against a de- Egyptian and American common against South Korean con- have followed Beijing in pun-
I want to denounce corrup- oceanfront buildings and surged cision by the Trump administra- interests and said they repre- sumer goods has hit hard here. ishing Seoul, curbing holiday
tion that knows no boundaries over a promenade, sweeping tion to withhold hundreds of mil- sented a misjudgment about the Kia factory workers have been travel to South Korea and
in Venezuela, she said. We need away walls and benches and lions of dollars in economic and nature of historic U.S.-Egyptian forced to accept dramatically turning away from Korean pop
authorities who are decent, not swamping parked vehicles. military aid to Cairo, in a rare strategic ties. They also reflected reduced hours and lower pay music and TV shows that had
ones with a criminal record. Authorities downgraded the sign of friction between two Washingtons lack of under- amid a precipitous drop in been hugely popular in China
She said the corruption storm to a category three by leaders who have lavished each standing about the importance of sales of Kia models in China. before the spat.
scheme includes illegal dealings late afternoon with government other with praise. supporting the stability and suc- Those measures have The boycott isnt popular in
with Brazils scandal-plagued services, the courts, financial The administration is cutting cess of Egypt, the ministry said. staved off widespread layoffs, Yancheng. The citys Korean
contractor Odebrecht and other markets and companies set to $95.7 million in military and eco- Dahlia Kholaif but even so, many workers affinity is on proud display,
firms. resume business on Thursday. nomic aid and putting $195 mil- and Felicia Schwartz have had to take second jobs with strips of Korean restau-
Ms. Ortega has criticized the as couriers or taxi drivers to rants, Korean-language street
installation of a powerful Con- make ends meet. signs and South Korean flags
stituent Assembly superseding This anti-Korean senti- fluttering along highways and
all other Venezuelan government ment doesnt do us any good, outside factories.
institutions and staffed with rul- said a 26-year-old Kia em- Yancheng boasts a sprawl-
ing party loyalists. One of the ployee surnamed Chen, who ing Korean business park,
assemblys first acts was to fire felt that punishing Kia was along with three Kia factories.
Ms. Ortega and strip legislating threatening Chinese jobs. Those factories employ 30,000
powers from the countrys oppo- Outside a company housing workers here, said a local
sition-dominated congress. complex, Kia staff said they Communist Party official.
On Tuesday, Mr. Maduro said were working as few as three Kia and the local auto-supply
his government would issue an days a month on half pay in industry that has sprung up to
arrest warrant for Ms. Ortega July. They were willing to en- support it contribute 60% of
through Interpol. He accused Ms. dure that in the short term, the citys tax revenue, closely
JEROME FAVRE/REX/SHUTTERSTOCK/EUROPEAN PRESSPHOTO AGENCY

Ortega of joining a Washington- Mr. Chen said, since their
led international effort to desta- overall incomes hadnt yet
bilize his government. She has taken a serious hitbut they
been working with the U.S. for a were growing increasingly
long time, Mr. Maduro said at a anxious about possible layoffs
press conference. should the spat continue.
Paulo Trevisani Kia is Yanchengs gold-stan-
dard employer, paying higher
HONG KONG wages than other local manu-
facturers. Layoffs would have
Typhoon Leaves Dead, a ripple effect.
Damage in Its Wake In Yancheng, everyone has
a relative that works for Kia,
Typhoon Hato, a maximum or its your friend, or the
category-10 storm, slammed into friend of a friend, said Sun
Hong Kong, lashing the financial Nan, sales manager at a local
hub with wind and rain that up- Kia dealership. The auto in-
rooted trees and forced most dustry is the backbone of
businesses to close, while in A taxi navigates a flooded waterfront street after Typhoon Hato roared through Hong Kong. Yancheng: No one wants any-
tying Yancheng and much of its
working population to the car
makers fate.
The sales of Kia and its par-
ent Hyundai Motors Co. in
China fell 61% from March to
June. The local official said the
plants were operating at only
30% capacity, but he said the
authorities werent contem-
plating that the plants might
close since so much invest-
ment had been sunk into them.
A Kia spokesman declined
to discuss the companys
China operations, beyond say-
ing its plants were operating
in line with the current market
environment.
A6 | Thursday, August 24, 2017 THE WALL STREET JOURNAL.

U.S. NEWS
Presidents Shutdown Threat Roils GOP
House speaker says licans are eager to shut down
the government, now that they
he supports Trumps control the White House and
border wall but wants both chambers of Congress.
A government shutdown
government kept open hurts Republicansits the
last thing I want, said Rep.
BY KRISTINA PETERSON Trent Franks (R., Ariz.), a
AND SIOBHAN HUGHES member of the House Freedom
Caucus who was at Mr.
WASHINGTONPresident Trumps rally Tuesday. It is a
Donald Trumps threat to shut political liability of profound
down the government if Con- significance to us.
gress doesnt approve funding Many GOP lawmakers
for a wall along the Mexico worry a shutdown or a failure
border raised alarm among to raise the governments bor-
some GOP lawmakers, inject- rowing limitanother dead-
ing new volatility into an al- line they are facing this fall
A government shutdown
would be fatal for our majority
and inappropriate for the
country, Rep. Dennis Ross of
Florida, a member of the
House GOP whip team, said
this week.
Democrats, whose votes
likely will be needed in both
chambers, swiftly rejected Mr.
Trumps demand Wednesday
morning. Spending bills need
60 votes to pass the Senate,
where Republicans hold 52
seats.
If the president pursues
this path, against the wishes
of both Republicans and Dem-

J. SCOTT APPLEWHITE/ASSOCIATED PRESS

ready uncertain political cli-
mate this fall.
Lawmakers returning to
Washington in early Septem-
ber have a dozen days with
both the House and Senate in
session before the govern-
ments current funding expires
on Oct. 1. Lawmakers from
both parties had expected
Congress to pass a stopgap
two- or three-month spending
bill, but Mr. Trumps remarks
raised fresh questions about
the path forward.
The GOP president said
Tuesday night that he was
prepared to dig in over his re-
quest for $1.6 billion toward
the border wall, one of his sig-
nature campaign promises.
Were going to get our
wall, Mr. Trump said at a
rally in Phoenix. If we have to
close down our government,
could harm their chances of ocrats, as well as the majority
retaining the House majority of the American people, he
in next years midterm elec- will be heading towards a gov-
tions. Treasury officials have ernment shutdown, which no-
said Congress must raise the body will like and which wont
governments borrowing limit accomplish anything, said
at some point near the end of Sen. Chuck Schumer of New
September. York, the chambers Demo-
If Congress doesnt raise the cratic leader, in a statement
debt ceiling to allow new bor- Wednesday.
rowing, the U.S. could default Among Democrats, the bor-
I dont think anyones interested in having a shutdown, House Speaker Paul Ryan said. on its debt or miss payments der wall has become a potent
for benefits and salaries. symbol for what they view as
were building that wall. a physical barrier was needed agreement later this year. Fitch Ratings said Wednes- Mr. Trumps hostility toward
Mr. Trumps push quickly in places along the border. Still, While some conservatives day that a failure to raise the both legal and illegal immi-
hit resistance within his own he said: I dont think a gov- agree with Mr. Trumps de- U.S. debt limit in a timely grants. The presidents re-
party. ernment shutdown is necessary mand for a wall, it is contro- manner would prompt a re- sponse to the violence in
I dont think anyones in- and I dont think most people versial among many Republi- view of the countrys credit Charlottesville, Va., earlier this
terested in having a shut- want to see a government shut- cans, some of whom think it rating for possible downgrade. month has also exacerbated
down, House Speaker Paul down, ourselves included. isnt the most effective way to Fitch said a government shut- tension between Democrats
Ryan said at a stop at an Intel Mr. Ryan said he expected tighten security. And after this down would have no direct and Mr. Trump, making a com-
Corp. facility in Oregon on lawmakers would need to pass a years protracted and unsuc- impact on its rating, but promise over the border wall
Wednesday. short-term spending bill in Sep- cessful struggle to roll back would highlight how political more elusive.
Mr. Ryan (R., Wis.) said that tember to give them more time and replace much of the Af- divisions pose challenges to Chris Dieterich
he agreed with Mr. Trump that to work out a broader budget fordable Care Act, few Repub- the budget process. contributed to this article

Addressing Veterans, Trump Calls for New Unity

BY REBECCA BALLHAUS
President Donald Trump
called for Americans to heal
the wounds that have divided
us a day after he accused the
news media of fomenting di-
visions and criticized law-
makers in his own party at a
rally.
Addressing the National
Convention of the American
Legion in Reno, Nev., on
Wednesday, the president
largely stuck to his prepared
remarks, saying it was time
to seek a new unity based on
ALEX BRANDON/ASSOCIATED PRESS
as an example of strength, came in the wake of a white
courage and resolve that our supremacist protest in Char-
country will need to overcome lottesville, Va., earlier this
the many challenges that we month during which a man
face. with a history of making sym-
Mr. Trump concluded his pathetic statements toward
remarks by inviting Medal of Nazis drove a car into a
Honor recipient and Vietnam crowd of counterprotesters,
killing one woman and injur-
ing 19 other people. Since
then, Mr. Trumps remarks
Americans, the about the violencewhich
president says, are initially oscillated between
condemning the white su-
not defined by race, premacists and saying that
wealth or party. both sides were to blame
have faced sharp criticism
drew thousands of protesters,
Mr. Trump again condemned
the violence in Charlottesville
but spent the bulk of his ad-
dress attacking the fake
news media and targeting
fellow Republicans who were
critical of his response to the
protest.
During the Tuesday rally,
Mr. Trump largely refrained
from naming Republican law-
makers, saying he had been
asked not to do so. But he did
allude to Arizonas junior
senator, Jeff Flake, with
whom he has been feuding

the common values that unite
us. He added: We are not
defined by the color of our
skin, the figure on our pay-
check or the party of our poli-
tics.
The president also praised
members of the American Le-
gion, the largest wartime vet-
Mr. Trump spoke at the National Convention of the American erans service organization.
Legion in Reno, Nev., after which he signed veterans legislation. We are here to hold you up
from lawmakers, business
leaders and civil-rights
veteran Donald Ballard to the groups.
stage, where Mr. Ballard On Monday Mr. Trump
praised the president. called for an end to bigotry in
Following his remarks, Mr. a speech announcing his ad-
Trump signed legislation that ministrations policy toward
seeks to streamline the pro- Afghanistan.
cess for veterans to appeal On Tuesday, at a Phoenix,
disability claims. rally organized by his cam-
His comments on unity paign for re-election that
since the senator criticized
his trade and border-wall
plans and decried his Char-
lottesville remarks.
On Wednesday morning,
Mr. Trump was more specific.
I love the Great State of Ari-
zona, the president wrote in
a tweet. Not a fan of Jeff
Flake, weak on crime & bor-
der!

FROM PAGE ONE

THERAPY water, tissueswith only one

Continued from Page One
When skeptical new clients
come into her office, Ms. Mil-
stein knows shes getting
somewhere when the sun-
glasses come off. They live al-
most a parody of themselves,
she said. They put on a show
for me sometimes.
The Beatles sought spiritual
direction from Maharishi Ma-
hesh Yogi. Ms. Milsteins ap-
proach is more rooted in tradi-
tional psychology.
Disagreements about the
set list? That gets to the un-
derlying issue of control, she
said. Disputes over who is
front-and-center at the photo
shoot leave her asking, Who
is not being heard?
Contemporary acts like
Lady Antebellum and Jon Bon
Jovi have publicly acknowl-
edged attending group therapy
sessions. When the pop stars
sign of her specialty: A framed
poster of John Lennon and the
lyrics to Imagine.
Sessions with five-member
bands can cost upward of
$500 an hour. About three-
quarters of her clients are mu-
sicians; morning appointments
are a rarity.
Though Ms. Milstein
doesnt discuss individual cli-
ents, sometimes her work can
follow her home. You hear
music on the radio, and youre
like, Thank goodness that per-
son got his addiction under
control, she said.
Some artists worry therapy
will deaden creative impulses,
she said, thinking infighting
keeps inspiration flowing.
Theyll say, Im going to be
all soft and not able to write
about anything, she said.
But its about being able to
enjoy all of this instead of self-
destructing.
Bands like Fleetwood Mac
TARA MCVICAR

Fifth Harmony saw one mem- and Guns n Roses snarled

ber leave in a messy exit last
year, the group issued a state-
ment to fans acknowledging
they had tried group therapy.
Ms. Milsteins niche has
been years in the making. Af-
ter graduating from University
of California, Los Angeles with
a degree in sociology and an
education from frequenting
clubs on the Sunset Strip, she
worked for nearly a decade at
A&M Records.
Managing tour marketing
and logistics for acts like Korn
and Sheryl Crow taught her
the finesse of working with
a star, she said: A balance of
respect and authority.
After getting a masters in
psychology, Ms. Milstein, 52
years old, opened her practice.
Her loft office has the hall-
marks of any therapistswall-
mounted degrees, bottles of
through blowups in the 1970s
and 80s that became as leg-
endary as their best-selling al-
bums. Professional therapy The Menstruators, behind the scenes of their Supergirl music video. Band members attended a therapy session with Dr. Jodi Milstein.
has entered the music indus-
try since then, notably original configuration, Home that. You hurt my feelings. two. When youre younger cisions. Both women
through the 2004 documen- Free won the 2013 season of F that. Its called business. and you have that healthy com- eventually had epiphanies in
tary Some Kind of Monster, NBCs The Sing-Off, and has Youre in a band. petition, it inspires you to do therapy sessions that led them
which showed members of earned fans through covers of Mr. Simmons, who has per- better, she said. Creatively it to leave their bands.
Metallica hashing it out with a songs like Ring of Fire and formed with the act since 1973 was good, but emotionally it Ms. Milstein says shes of-
therapist on tour. How Great Thou Art. but seen bandmates come and was still pretty scarring. ten hired by managers as an
When the a cappella coun- All-vocal groups must find go, said the groups manager When a 2013 reunion objective third party, and
try group Home Free replaced literal harmony on stage, said often became a quasi-therapist, brought members together, older bands have come in for
a founding member in 2016, Mr. Foust, making personal albeit one employed by them. the problems between the therapy sessions ahead of re-
the new five-person ensemble dynamics important. An in- Youre surrounded by yes two Pandoras started again 20 union tours. She suggests
holed up in a New York confer- strumental band can live in men. Nobody is going to tell years later! she said. drawing a line on the past,
ence room with a performance their own world, he said. If you that your breath stinks or This time, with therapy less asking, Any more to clean up
coach for trust-building exer- there is more harmony off- that youre an idiot, he said. of a stigma, she was comfort- on that? and moving on.
cises and positive affirmation. stage, we gel better on stage. Susan Hyatt, a 49-year-old able asking a former bandmate Shes on high alert when
The session stretched for Some rock stars scoff at the songwriter in Nashville, never to a session. Over five meet- musicians go on the road.
hours, recalled bass singer idea of opening up. would have sought group ther- ings, they hashed out issues, Among the coping strategies
Tim Foust. Feelings, schmeelings, apy with her bandmates in the clearing up misunderstandings she discusses: Dont hole up in
We all went around and said Gene Simmons, the long- Pandoras, a Los Angeles band Ms. Hyatt had held for de- the hotel. Take your tour
stated the various strengths of time frontman of Kiss. Thats that formed a cult following in cades about her bandmate vot- manager, your bodyguard, and
one another, he said. Under its kids stuff. Guys dont talk like the 1980s before splitting in ing against her on set-list de- go for a walk.
 THE WALL STREET JOURNAL. Thursday, August 24, 2017 | A7

U.S. NEWS

University Fights
Fetal-Tissue Law
BY JACOB GERSHMAN
A legal challenge to an Indi-
ana law that criminalizes re-
search using the remains of
aborted fetuses could deter-
mine how much power states
have to restrict scientific ac-
cess to fetal tissue.
The unusual case pits Indi-
anas government against the
states flagship research uni-
versity, which is asking a fed-
eral court to declare Indianas
fetal-tissue statute unconstitu-
tional.
The 2016 law makes it a fel-
ony to intentionally acquire,
receive, sell or transfer
ASSOCIATED PRESS
Debomoy Lahiri, a professor of
neurobiology, psychiatry and
genetics who is trying to de-
velop a cure for Alzheimers.
Dr. Lahiri is one of the top
scientists for the schools Alz-
heimer Disease Center, one of
about 30 NIH-funded centers
advancing research into the
disease.
The universitys lawsuit
makes multiple constitutional
claims. The fetal-tissue law, it
argues, violates the First
Amendment by abridging aca-
demic freedom, and it says it
violates rights to equal protec-
tion by discriminating against
researchers who use aborted

aborted fetal tissue. Indiana fetal tissue.

University filed suit soon after
Mike Pence, now the vice pres-
ident, signed it into law in his
final months as Indiana gover-
Muhammad Ali slips to the canvas during the 14th round of his Heavyweight title fight with Earnie Shavers in New York in 1977. nor.
A federal judge is weighing
But it is the Commerce
Clause claim that the univer-
sity puts front and center. The
school is invoking a constitu-
tional doctrine that prevents
states from interfering with

Boxing Took Early Toll on

whether to dismiss the lawsuit
and allow prosecutors to en-
force the law or to strike down
the statute. A ruling could
come by year-end.
free trade across their bor-
ders.
University court briefs liken
the tissue regulation to state
laws invalidated years ago

Muhammad Alis Speech

While best known for his authors of this pieceJulie
boxing talent, Muhammad Ali Liss and Visar Berisha, scien-
was also one of the greatest tists at Arizona State Univer-
talkers of all time. sity who specialize in analyzing
At a time when it was dan- speech for signs of cognitive
gerous for black men to sass and motor impairment. Eig
white people, Ali did just that. also enlisted CompuBox Inc., a
He spoke up and spoke back, boxing-statistics company, to
count the punches that struck
By Jonathan Eig, Ali over the course of his 21-
Visar Berisha year professional career. The
and Julie Liss study was scheduled to be pre-
sented Wednesday at Inter-
using his tremendous wit and speech, a speech-science con-
intelligence to challenge au- ference in Stockholm, Sweden.
thority and undercut notions Speaking is one of the
of what a black person in bodys most complicated func-
America could say and do. He tions. Speech and language
earned his first nickname, circuits in the brain work to-
The Louisville Lip, in tribute gether to form a message,
to his verbal gifts. translate that message into
Sadly, however, Alis voice movement across more than
fadedliterally and much too 100 muscles, from the lungs to
soon. the throat to the tongue and
According to a new biogra- lips, and execute those intri-
phy of the boxer and a study cate muscle movements to
released Wednesday by speech produce sound waves. It is
scientists at Arizona State much more difficult than
University, Alis articulation throwing a jab or dodging a
started to become less precise tackle.
in the mid-1970s, when he was That is why changes in
between 30 and 35 years old, speech are often one of the
almost certainly as a result of first indicators of neurological
blows to the head suffered in damage or disease, such as
syllables a second, and it con-
tinued sliding steadily, year by
year, fight by fight. An ordi-
nary adult would see little or
no decline in his speaking rate
between the ages of 25 and
40, but Ali experienced a drop
of more than 26% in that same
period. Slowing his speaking
rate couldnt indefinitely com-
pensate for the deterioration
of signals between his brain
and his speech muscles. The
paper suggests that by 1978,
six years before his Parkin-
sons syndrome diagnosis and
three years before his retire-
ment from boxing, Ali was
slurring his words.
In addition to this overall
decline in speech, researchers
found a strong relationship
between Alis activity in the
ring and his verbal skills. The
more punches he took, the
more steeply his speaking
abilities declined. (You can
hear a sample of Alis speech
changes at WSJ.com/Sports.
In 1977, the 35-year-old Ali
fought a brutal, 15-round bout
with Earnie Shavers. One of
the strongest punchers in box-
ing history, Shavers hit Ali
nosed with Parkinsons syn-
drome. His doctor at the time
said the condition was the re-
sult of too many blows to the
head.
Today, we have a better un-
derstanding of the damage
blows to the head cause ath-
letes. We also know that about
50% of those diagnosed with
chronic traumatic encephalop-
athy, or CTE, show signs of
change in speech and language
prior to diagnosis.
Muhammad Ali gave a lot to
the world. He helped to lead
opposition to the Vietnam
War. He taught athletes black
and white that they could use
their public platforms to speak
out on social and political is-
sues. He used his voice, not
his fists, to pound home those
lessons.
Now, his voice has the
power to instruct us yet again.
Ali is telling us we can do a
better job of warning athletes
of the dangers they face from
head trauma.
Jonathan Eig is the author of
Ali: A Life, which will be
published Oct. 3; Visar
The dispute isnt the first to
target a state regulation of fe-
tal tissue. But it is the first
time that medical researchers
have led the charge, according
to lawyers involved.
Also setting the case apart
is the universitys lead argu-
ment: that the states regula-
tion is an unconstitutional re-
straint on interstate
commerce.
Were the legal argument to
prevail, according to lawyers,
it could be leveled against
similar fetal-tissue restrictions
on the books in other conser-
vative states, such as South
Dakota and Louisiana.
Since 2011, Indiana Univer-
sity has received fetal brains
from the Birth Defects Re-
search Laboratory at the Uni-
versity of Washington under a
National Institutes of Health
grant.
The remains are used by
banning the sale of margarine
or fresh meat slaughtered
more than 100 miles from the
point of sale.
It is an argument premised
on the idea that aborted fetal
tissue acquired by Dr. Lahiri is
an article of commerce. The
fetal matter qualifies as such
because Dr. Lahiri must pay a
fee to obtain it, and it crosses
state lines when shipped to In-
diana from Washington, the
university stated in a brief.
Attorneys for the state say
the fetal shipments cant be
considered trade, given that
federal law prohibits profiting
from the sale of fetal tissue.
In court filings, Indiana
University accuses the state of
threatening significant re-
search progress related to Alz-
heimers and other diseases
and the institutions impor-
tant role and reputation in the
global research community.
DARRON CUMMINGS/ASSOCIATED PRESS

the ring. The study suggests the slurring of words by peo- with 266 punches, including Berisha is an Assistant
that changes in the quality of ple having a stroke or with 209 power punches, according Professor of Speech and
speech can be important early Parkinsons or Lou Gehrigs to the new CompuBox data. Hearing Science and
markers of neurological dam- disease. The signals from the Before his fight with Shavers, Electrical Computer and
age or disease. Ali died in brain to the speech muscles Ali spoke at a rate of 3.7 sylla- Energy Engineering at
June 2016 at the age of 74. are disturbed in ways that bles per sec. After the fight, Arizona State University and
In writing Alis biography, prevent clear speech. his speaking rate fell 16% to 3.1 Co-Founder of Aural
one of us, Jonathan Eig, won- In 1968, Ali spoke at a rate syllables per second. His voice Analytics; Julie Liss is a
dered when Alis speech began of 4.1 syllables a second, also became less animated im- Professor of Speech and
to decline and whether that de- which is close to average for mediately after fights. Hearing Science at Arizona
cline could be tied to boxing. healthy adults. By 1971, his In 1984, three years after State University and Co- A 2016 law passed by the Indiana Legislature makes it a felony to
Eig contacted the other two rate of speech had fallen to 3.8 his final fight, Ali was diag- Founder of Aural Analytics. intentionally acquire, receive, sell or transfer aborted fetal tissue.

U.S. WATCH
Iowa Seeks Health-Law Waiver MEMOIR Mrs. Clinton and her publisher ECONOMY
Iowa asked for federal per- are billing the new memoir as a
mission to alter major provi- Clinton Says She Let candid take from the 2016 Dem- Sales of New Houses
sions of the Affordable Care Down Millions ocratic nominee on what it was In the U.S. Tumble
Act next year, a proposal that like to run against Mr. Trump,
will be closely watched by of- In a hotly anticipated memoir, who defeated her in one of the U.S. sales of new single-family
Hillary Clinton writes that her up- most unconventional political homes fell sharply in July, provid-
By Anna Wilde set loss to Donald Trump in the campaigns in American history. ing fresh evidence that a shortage
Mathews, Michelle 2016 presidential race will haunt I want to pull back the cur- of housing inventory is depleting
Hackman her for the rest of her life, ac- tain on an experience that was activity across all segments of the
MATTHEW PUTNEY/ASSOCIATED PRESS

and Stephanie Armour cording to excerpts of the audio exhilarating, joyful, humbling, in- market. Purchases of newly built
version that aired Wednesday. furiating and just plain baf- single-family homes, a narrow
ficials in other states who Every day that I was a can- fling, Mrs. Clinton says in the slice of all U.S. home sales, de-
hope to rewrite parts of the didate for president, I knew that audio excerpt. creased 9.4% to a seasonally ad-
health law as Republican ef- millions of people were counting The former secretary of justed annual rate of 571,000 in
forts to do so in Congress on me. I couldnt bear the idea state, U.S. senator and first lady July, the Commerce Department
have stalled. of letting them down. But I did, has been making a slow-but- said Wednesday. It has been sur-
Iowas plan, which state of- Mrs. Clinton said in an excerpt steady return to the public stage prising the extent to which new-
ficials said they were prepar- aired on MSNBCs Morning after initially keeping a low pro- home sales have not picked up
ing to implement, pending fed- Joe. I couldnt get the job done. file following the November elec- more, said Aaron Terrazas, a se-
eral approval, would go Iowa and other states are seeking waivers from the Affordable And Ill have to live with that for tion. She has started Onward nior economist at Zillow. It does
further than proposals that Care Act to shore up individual insurance markets. the rest of my life. Together, a political organization seem to reflect a bit of a market
other states have made so far The book, What Happened, she has said will help fund pro- breakdown.
to revamp the health laws according to the National Con- states or to continue efforts to is set to be released Sept. 12 by gressive grass-roots causes. Laura Kusisto
rules. The Iowa setup would ference of State Legislatures. repeal the 2010 law. Simon & Schuster. Joshua Jamerson and Sarah Chaney
offer just one type of insur- Iowa Insurance Commis- The Iowa proposal would
ance plan in the individual sioner Doug Ommen, a Repub- change important features of
market and reshape the subsi- lican, said the state has the federal health law. The
dies that help people buy cov- worked with the federal Cen- ACA premium subsidies that
erage, among other changes. ters for Medicare and Medic- enable lower-income people to
State officials, who are for- aid Services and that it hoped buy health insurance would
mally filing for federal ap- to get its new system running become flat payments tied to
proval under a special waiver before individual-plan enroll- age and income; under the
setup allowed by the ACA, ar- ment kicks off in November. ACA, the subsidies are tied to
gue that they need to repair Iowas largest insurer, Well- actual premium costs in a re-
an exchange market that is ex- mark Blue Cross and Blue gion and cap what low-income
pected to be down to just one Shield, said it would reverse people must pay toward those
insurer that has requested its plans to exit from the monthly bills. Iowas setup
sharp rate increases for 2018. states individual market and would also eliminate so-called
JUSTIN SULLIVAN/GETTY IMAGES

States including Idaho, Min- would instead sell plans in ev- cost-sharing subsidies that
nesota and Oregon have sub- ery county next year if the help cover deductibles and
mitted applications for less- state received a waiver. other out-of-pocket costs for
sweeping waivers that aim to In Washington, the ap- the lowest-income enrollees.
blunt insurers expenses for proaching deadline for insur- Patient groups have raised
covering the claims of people ers on whether to take part in concerns about the potentially
with costly health conditions. health exchanges has put pres- higher costs for low-income
In total, 13 states have passed sure on GOP leaders to decide enrollees under the Iowa plan,
laws authorizing state officials whether to take steps to shore largely because of the elimina- I want to pull back the curtain on an experience that was exhilarating, joyful, humbling, infuriating
to craft ACA waiver requests, up marketplaces in certain tion of the cost-sharing aid. and just plain baffling, Mrs. Clinton said in the audio excerpt of her memoir, set for release Sept. 12.
A8 | Thursday, August 24, 2017 THE WALL STREET JOURNAL.

U.S. NEWS

How Budget Airlines

Transformed the Industry
Low-cost carriers, once ridiculed for cramped seats and cattle-like boarding, have come of age.
BY ROBERT WALL AND SUSAN CAREY | GRAPHICS BY ANGELA CALDERON

Low-fare seats as pct. of total Average round-trip ticket price Comparison of services in Brazil, 2016 Airports served by Azul Airline routes

60% $1,200 A one-way trip from Campinas to Salvador (approximately 900 miles*) 100 20 thousand
South Asia
57.2% COST
50 Southeast 1,000 By airplane 185 reais
52.6%
By bus 229 reais 75 15
40 Europe 800 TIME
37.9%
By airplane 2 hours
North
30 America 600 By bus 50 10
30 hours
32.7%
South A one-way trip from Campinas to Aracatuba (approximately 250 miles*)
20 America 400
COST
32.2% 25
By airplane 185 reais 5
10 200 By car 290 reais
East Asia
8.4% TIME
0 0 By airplane 1 hour 0 0
2005 16 1995 2000 05 10 15 2010 12* 14 16
By car 4.5 hours 1995 2000 05 10 15
Note: Adjusted for ination *Azul acquired Brazilian discounter TRIP
Source: International Air Transport Association Source: International Air Transport Association *Miles between cities, not driving distance Source: Azul Source: the company Source: International Air Transport Association

Discount carriers have In the process, they are When JetBlue Airways Corp. founder David Neeleman Last year, Azul carried As budget airlines spread
dominant positions in changing how the world started budget carrier Azul SA in Brazil in 2008, one 20.6 million passengers, around the globe, regular
many of the worlds most flies. Their low airfares of his goals was to create brand-new airline customers had a domestic market air service has been intro-
important markets. They have forced down prices by attracting people accustomed to traveling by long- share of 17.5% and served duced to more remote cit-
are stealing passengers across the industry, mak- distance bus or car. . . 102 airports... ies, including Kiruna, Swe-
from full-service carriers. ing travel cheaper and den, north of the Arctic
Last year, for the first getting people to take to Circle, and Bandung in
time, they carried more the sky who previously West Java, Indonesia.
than one billion fliers couldnt afford it... There are more direct
nearly 30% of the 3.7 bil- city-to-city flight choices
lion who took to the air... now than ever. ..

Budget airlines domestic market share U.S. domestic airline market Largest European airlines* Trafc through Budapests
share airport
50% 125 million passengers
40% 12 million
AsiaAir*
Low-cost
carriers Ryanair
40 100
30 10

30 20 75 Lufthansa 8
American
Delta EasyJet
Volaris
United
Southwest 10 6
20 50
Ultra-
Azul discounters British
0 Airways 4
10 2007 16 25
Wizz Air 2
*includes Southwest, JetBlue, Virgin America,
Sun Country and AirTran includes Spirit,
0 Frontier and Allegiant 0
Note: Delta acquired Northwest in 2008.
2005 10 15 0
United bought Continental in 2010. Southwest 2000 05 10 15
acquired AirTran in 2011. American bought US 2000 05 10 15
Note: 2017 gures are estimates. *Malaysian ights Airways in 2013. *by passenger numbers 2016 includes Eurowings
Source: the companies Source: Compass Lexecon Source: the companies Source: Budapest Airport

In the U.S., about one in three passengers flies on a In the U.S., discounter The story is the same in Europe. Irish discount carrier Hungarian budget airline
budget carrier. In the fast-growing Indian and South- JetBlue is now the largest Ryanair Holdings PLC became the continents biggest Wizz Air Holdings PLC,
east Asian markets, such carriers control 53% of seats. U.S. carrier at New Yorks airline last year by passengers flown, beating out copying the model, began
Mexicos Volaris Aviation Holding Co. has 28% of the JFK and Bostons Logan. Deutsche Lufthansa AG. Ryanair boss Michael OLeary flying in 2004. Eight years
domestic market. Indias IndiGo, also called InterGlobe Discount-industry pioneer says budget airlines in Europe still have ample room later, the countrys flag
Aviation Ltd., which started flying in 2006, how has Southwest Airlines Co., for growth. . . carrier, MALV Hungarian
40% of the domestic market. . . along with JetBlue and Airlines, closed. The Lon-
Spirit Airlines Inc., now fly don-Budapest route be-
64% of customers from came competitive and
Fort Lauderdale, Fla. . . low-cost, stimulating de-
mand and quadrupling ca-
pacity...

Airplane orders Cost to y a seat a mile, excluding fuel Budget carriers entering the Value carrier percentage of
AIRLINE ORDERS
intercontinental market long-haul ights*
Air France-KLM 11.7 cents
IndiGo Airbus A320neo 430 8%
2006
AirAsia 398 Lufthansa 11.1
Lion Air 183 2007
Go Air 144 American 10.5
Asia/
EasyJet 130 2008 Oceania
Delta 10.2 6
Wizz Air 110 2009
Norwegian Air 97 United 10.1
JetBlue 85 2010 North
Pegasus 75 British Airways parent* 9.4 America
VietJet 73 2011 4 World-wide
Southwest 8.7
Lion Air Boeing 737 Max 201 2012 Europe
EasyJet 7.9
Southwest Airlines 200
SpiceJet 142 2013 Latin
Allegiant 6.4
2 America/
Norwegian Air 108 2014
Spirit 5.8 Caribbean
Ryanair 100
VietJet 100 2015 Africa/
Wizz 4.1 Middle East
Flydubai 75
2016
GOL 69 Ryanair 3.8 0
WestJet 67 2017 2007 12 17
36 *International Consolidated Airlines Group owns British Airways, Iberia, Vueling and Aer Lingus
Ruili Airlines
Note: As of June 30, 2017, except for European budget airlines, which are as of Dec. 31, 2016 *2,800 miles or longer
Source: the companies Sources: the companies; Bernstein Research Source: CAPACentre for Aviation Source: Oliver Wyman

How do they keep prices low? To minimize training Pay packages are less generous than at legacy carri- The final frontier for dis- Discount airlines have
and maintenance costs, they mainly have fleets of the ers, and many employees lack seniority and are at the count carriers is global begun adding interconti-
same kind of planesmany now outfitted with leather lower end of wage scales. As relative newcomers, dis- travel. .. nental routes, previously
seats and seat-back entertainment. And they often count carriers dont have huge pension obligations and the domain of legacy car-
buy those planes in bulk from Boeing Co. or Airbus SE often dont have unions. This gives them a big edge riers, which have been
to get discounts... on costs. . . setting up their own bud-
get long-haul units to
compete.
THE WALL STREET JOURNAL. Thursday, August 24, 2017 | A9

LIFE&ARTS
WORK & FAMILY | By Sue Shellenbarger

After a Bad First Impression...

An early slip can do serious damage with a boss, colleague or client; heres how to redeem yourself
ITS A MOMENT FEW can avoid:
You meet someone you want to
impress but wind up starting with
a glaring faux pas. That tone-deaf
comment to a prospective boss or
spilled coffee all over a customer
can wreck everything.
The moment Angela Copeland
showed up for a job interview at a
California clothing company years
ago, she knew it was over. She had
the digital-marketing skills the
company needed, but the inter-
viewers wore Birkenstocks and ca-
sual clothing of natural fabrics and
she showed up in heels and a black
tailored suit. I could immediately
see the look on their faces, think-
ing, Why is she here? says Ms.
Copeland, a career coach in Mem-
phis, Tenn. She never got a second
chance.
Its possible to recover from a
bad first impression. But it takes
time, effort and some nuanced
skills.
First impressions are very
sticky, says Heidi Grant, author of
No One Understands You and
What To Do About It, a book
about the psychological factors
that shape peoples interactions.
Those impressions are rooted in
biased thought patterns, including
the primacy effectthe tendency
for the first few things people no-
tice about someone to influence
how they interpret information
later, Dr. Grant says. Another pat-

tern, called confirmation bias,
causes people to notice only de-
tails that confirm what they al-
ready believe. People see what
they expect to see, she says.
When Ms. Copeland got off on
the wrong foot with new acquain-
tances again a few years later, she
knew how to repair the damage. At
a leadership program she at-
tended, other participants told her
they saw her as cold and un-
friendly at first. Im an introvert
and I can be somewhat formal,
she says.
But her colleagues said they felt
friendlier to her after she talked
with them one-on-one. I took the
time to get to know each person
and find common interests, Ms.
Copeland says.
Spending a lot of facetime with
someone can repair a bad start, Dr.
Grant says. If youve made a bad
impression on a manager whos
about to become your boss, ar-
range to work out at the gym or
hit the company cafeteria at the
same time she doesnot to stalk
her, but to build familiarity with a
casual greeting or wave.
ROB WILSON
Offering lots of evidence to would see the executive and others deprecating humor can show you based Research Into Action.
counter a bad start can help. If she knew at his level. She wove take your mistake seriously and Eric Gates interviewed a job ap-
youre late for a meeting, make more evidence of her experience understand how you made the plicant at a previous employer sev-
sure youre early every other time into the conversation. In time she other person feel, says Kate White, eral years ago who made a terrible
in the future, for a long time, overcame the executives first im- a former editor in chief of Cosmo- first impression by confessing that
says Alyssa Gelbard, founder and pression and he became a valuable politan magazine and author and hed done prison time for dealing
president of Resume Strategists in contact. speaker on career issues. meth. Mr. Gates, an Austin, Texas,
New York. Erasing a bad first im- If you muffed a job-interview minister and former police officer,
pression takes patience, she says. question about your past accom- joked with the man about having
You cant just snap your fingers plishments, follow up by sending been on opposite sides in the
and make it go away.
Poking fun at yourself work samples showing your skill, criminal-justice system, then made
Ms. Gelbard, who is in her can show you take your Ms. White says. You want to daz- a conscious decision to move be-
mid-40s, was disappointed at a re- zle them, to show that the under- yond his initial shock and re-evalu-
cent networking event when a se-
mistake seriously and lying impression you made doesnt ate the applicant, Mr. Gates says.
nior executive in his 60s assumed want to make amends. matter, she says. The man quickly showed he
she was younger and lacked se- Offering to help the other per- wasnt the criminal hed been in a
nior-executive status, she says. He son reach an important goal can previous life, Mr. Gates says, by
kept dropping such comments as, nudge her toward acceptance, Dr. describing his self-improvement
That was before your time, so you Drawing attention to common Grant says. Use the collaboration efforts and handing Mr. Gates a
couldnt relate. bonds, such as rooting for the as an opportunity to showcase list of people willing to serve as
She patiently worked to undo same sports team, can help dispel your skills. references.
that impression, emailing him via bias, says a 2015 review of 119 Opening up and sharing details He came prepared to answer
LinkedIn, where her profile shows studies led by Elizabeth Focella, a about your experience can help the tough questions, Mr. Gates
her 1996 M.B.A. and her years of researcher at the University of Ari- erase others negative views by says. He decided to take a chance
experience as an executive-career zona at the time. evoking empathy, says the 2015 re- and hire the applicant, and the
consultant. She later went to a Poking fun at your own blunder search review by Dr. Focella, a man became one of his best em-
gathering where she knew she can ease the tension. A little self- consultant with Portland, Ore.- ployees.

ART REVIEW growing mastery of composition, over the

years, and note the way she heightened tex-

SEEING AN
tures and simplified shapes in her last works,
painted when she was 100. (She is supposed
to have said she thought she was becoming
more modern.) What remains constant is

ICON ANEW Moses preference for omniscient, panoramic

views, her reliable sense of placement, and
her ability to animate and punctuate complex
scenes with busy figures and animals whose
activities are always completely intelligible.
We can enjoy the paintings idyllic vision
BY KAREN WILKIN
of a now-vanished, unspoiled, pastoral
BENNINGTON MUSEUM/GRANDMA MOSES PROPERTIES CO. NY

world governed by the seasons, marvel at a

Bennington, Vt.
IN 1939, the Advisory Committee of the Mu-
seum of Modern Art organized its first exhi-
bition installed in the Members Rooms of the
53rd Street building. Titled Contemporary
Unknown American Paintersoutsider art
wasnt yet coinedit showcased works by 18
artists, their names followed by such labels
as Milliner. Brooklyn, Unemployed. The
Bowery, N.Y., andshockingly, to todays
sensibilitiesNegro housewife. Missouri.
One, Anna Mary Robertson Grandma Moses
(1860-1961), a Housewife. New York, was a
farm woman who at age 78 began painting
scenes of rural New England life. Her work
had been discovered the previous year in a
drugstore in upstate Eagle Bridge, N.Y.:
charming birds-eye views of barns and bug-
gies, farmyards and clapboard houses, stee-
pled churches and sleighs, populated by agile
figures and lively animals. A year later, in
1940, Grandma Moses had her first solo exhi-
bition, at New Yorks Galerie St. Etinne.
She quickly became a full-fledged Ameri-
can icon, her images seen as emblematic of
the values of postwar U.S. society. Moses
work was reproduced on greeting cards, cal-
endars, tiles, fabric and dinnerware. In 1950,
the U.S. Information Service circulated in Eu-
rope a large exhibition of her paintings. In
1953, after countless shows internationally,
she appeared on the cover of Time magazine,
a perfect embodiment of a salt-of-the-earth
unsophisticate, with her cheerful grin, rim-
less glasses, and white topknot; a country
church in winter, from one of her paintings,
was seen behind her. In her 90s, she was fea-
tured on television, including on Edward R.
A Country Wedding (1951), by Anna Mary Robertson Grandma Moses
Murrows See It Now. curator Jamie Franklin creates informative
Modernism has long embraced the work
of self-taught artiststhink of Henri Rous-
seauwhile today they are viewed with in-
creasing admiration. Yet despite Moses de-
but at MoMA and her representation by a
respected New York gallery, her popularity
and celebrity compromised serious apprecia-
tion of her art. Now, Grandma Moses:
American Modern, at the Bennington Mu-
seum, Vermont, offers a fresh evaluation of
this well-known but problematic figure. Co-
organized with the Shelburne Museum, Ver-
mont, where it was seen earlier, the exhibi-
tion is a comprehensive survey of Moses
career, contextualized by a small group of
works by her schooled modernist contem-
poraries, including some who are on record
as admiring her paintings.
In the Bennington Museum installation
and in his fine catalog essay, the museums
display of vintage Grandma Moses spinoff
products, or meditate on the political value
of her imagery for 1950s America (see prod-
ucts), as discussed in the excellent catalog.
But we are also given ample evidence, dis-
covered by recent research, that Grandma
Moses was not simply a little old lady inno-
cently depicting her memories. Instead, she
proves to have been a thoughtful interpreter
of existing imagery, whose father painted
landscapes. She was largely ignorant of art
history and contemporary art, but she was
responsive to suggestions from photo-
graphs, advertisements, chromolithographs,
needlework samplers, childrens books, and
the like, some of which she clipped and
saved in a trunk of what she called art se-
crets, often tracing the outlines of particu-
juxtapositions with works by Helen Franken- lar images for her paintings. Once alerted to
thaler, Joseph Cornell, Andy Warhol and this by a selection of original material, we
Fernand Lger, among others, underscoring look differently at, for example, a foreshort-
the obvious differences among them, but ened horse-drawn sleigh in a snow scene.
finding unexpected commonalities in their Grandma Moses: American Modern re-
attitudes toward nature and their ways of veals that while Moses paintings are about
working. We learn, for example, that Moses, her long experience of traditional farm life,
like Warhol, often repeated images, as we they are also considered works of the imag-
discover when we track a checkered house ination, provoked by memory but ultimately
from picture to picture. invented from a combination of observa-
The generous selection of Moses paintings tion, recollection and what might be called
at the Bennington Museum allows us to fol- appropriation. Theyre no less charming
low her evocations of different seasons and once we know this. If anything, we gain new
of subjects as diverse as the Battle of Ben- respect for the Housewife. New York.
nington, which includes the commemorative
monument erected a century after the event; Grandma Moses: American Modern
a country wedding in the 1890s; boiling ma- Bennington Museum, through Nov. 5
ple sap for syrup; and the Eagle Bridge hotel,
with buggies in the foreground and a locomo- Ms. Wilkin is an independent curator and
tive spewing smoke. We can follow, too, her critic.
A10 | Thursday, August 24, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
The Great Nazi
Macrons Test for France Scare of 2017
A
s the popularity of the new French Presi- Voters were wise enough to endorse this
dent tumbles, the question isnt whether agenda, giving Mr. Macron a mandate to cut gov- Well, that was a bit tirety, is available online and takes 23
embarrassing. Anti- minutes to watch. He didnt fail to de-
Emmanuel Macron can save France. The ernment jobs, reduce taxes on corporations and
fascist liberals nounce Nazis and racists.
question is whether France can overhaul labor and pension mounted thousand- An account of events in Charlottes-
save itself. Voters have the If he cant fix the regulations. The timing will strong counterrallies ville is also taking shape. Mr. Trump
best chance in a generation to economy, can anyone? rarely be better. Economic all weekend against a feels he has been treated unfairly.
revive an economy in decline, growth is stronger than ex- Nazi threat that Guess what? Thats politics. Your oppo-
yet they seem to quail at the Do voters want him to? pected at 1.8% year-on-year, BUSINESS
proved nonexistent or nents arent required to give you a
WORLD
critical moment. and the jobless rate is at a By Holman W.
thin on the ground. break. Outsmart them.
Mr. Macron deserves some post-2012 low of 9.2%. Growth Leftists imagined President Obama would have spoken
Jenkins, Jr.
of the ire thats reflected in approval ratings that in the U.S. and a reviving eurozone provide rare themselves to be carefully, starting with: Though we
have fallen to 35% in recent polls, compared to tailwinds for French reform. modern-day versions dont have all the facts, one thing
the 66% of the vote he won in May. His leader- On foreign policy Mr. Macrons demand for of the Czech resistance or the Warsaw Americans can agree about is that Nazi
uprising, but it turns out they were ideology and racial hatred are offensive
ship style is aloof, which the French used to not more European Union fiscal cooperation threat-
the majoritarian mob shouting down to American ideals.
consider a defect but now apparently do. Spend- ens to be a distraction, and it will be a waste of po- a handful of losers whove been an ex- Even an Obama Justice Department,
ing cuts antagonized the military, and he need- litical capital in the face of inevitable German op- ecrable but small part of the American though, would be open to the possibil-
lessly embroiled himself in a debate over position. But France shouldnt require a politician pageant for as long as most of us can ity that Americans holding a legally
whether his wife should have an official, and tax- of messianic personal virtue and infallible politi- remember. permitted rally were beset by a mob
payer-funded, state role as first lady. His atti- cal judgment to pass a new pension bill. If Mr. Ma- We dont know what speakers at while police failed to keep order, if
tude toward the press is reminiscent of Donald cron isnt good enough despite his missteps, no Saturdays free speech rally in Bos-
Trumps, with more polish. other French politician is likely to do better. ton might have said. It was organized,
The bigger problem is that voters are having Several French politicians would like to do according to the local papers, by liber- Fear the majoritarian mob,
second thoughts about economic reform. Mr. Ma- worse. Although the Socialist Party is divided, tarians protesting campus speech whatever its ideological
codes, though they opened their plat-
crons approval started falling in July after he an- the opposition to Mr. Macron is sliding further predisposition.
form to anybody, left and right.
nounced plans to cut housing benefitsby 5 a left, with the Bernie Sanders-esque Jean-Luc The meeting ended early; the speak-
month for each recipient. Feminists are in arms Mlenchon and his France Unbowed move- ers were all drowned out. Nazis and
over his plan to reduce the governments womens- ment promising voters another attempt to make white supremacists, if any were pres- thats what the facts eventually
rights budget to 20 million ($23.6 million) from socialism work. The danger is that voters fall for ent, were shown to be vastly outnum- showed. From the Washington Post
30 million. Thats before he gets to the labor re- it if they grow skittish about Mr. Macron. bered by Americans who reject such comes an interesting social character-
forms that will dominate the autumn. Mr. Macron made his choice when he cam- doctrines. ization of todays young white nation-
Youd think voters would recognize theyre paigned for supply-side reforms despite voters To state another obvious point, alist idiotsbut also a description of
getting their moneys worth. Economic reform traditional hostility to those ideas, and maybe Americas civil liberties are meaning- how their van was attacked with flying
was Mr. Macrons central pitch to voters in the voters surprised themselves by electing him. less if they dont protect unpopular bottles and other objects.
spring. He speaks frequently and well on the Septemberwhen the draft labor law is due, and views. Its not the mob but the mobs According to Charlottesvilles Daily
targets that need protection. Progress, there were two armed mili-
need to make France a nation of unicorns, when a general strike is set to beginwill be a
For the record, of the 20th centurys tias, one representing a pro-Constitu-
meaning innovative tech start-ups and other test of whether French voters are prepared to malign ideologies, Nazi ideas of who tion group, the other a left-wing group.
companies. stand by their decision. should be murdered and why strike me No shots were fired. They worked to-
as slightly more odious and frightful gether to break up fights. Neither sup-
than Maoist or Stalinist ideas of who ported the Nazis, and both promptly
Beijings Threat to Academic Freedom should be murdered and why. The ap- withdrew when the governor declared

C
plicability to current U.S. events is an unlawful assembly.
ambridge University Press taught the ac- Thats not much of a choice for Cambridge slender, though. In a tweet she has been made to re-
ademic world a valuable lesson this week and other Western schools. More than 91,000 More relevant is the principle that gret, the New York Timess Sheryl Gay
in how not to respond to Chinese gov- Chinese students attended British universities large mobs are more dangerous than Stolberg reported: The hard left seemed
ernment censorship. As West- in the 2015-16 school year, and small mobs, and likely to harbor more as hate-filled as alt-right. I saw club-
Cambridge Press pays they pay between two to three psychopaths. Apparently running out wielding antifa beating white national-
ern universities become de-
of Nazis to resist, Boston protesters ists being led out of the park.
pendent on China-related a price for bowing to times the tuition of students threw rocks and urine-filled bottles For its part, the FBI has put out a
funding and the Xi Jinping re- from European Union coun- at police. call for witnesses and video of James
gime tightens control over Chinese censorship. tries. American universities Any shortage of white supremacists Alex Fields Jr. before he got in his car.
speech, the temptation to sac- enrolled 328,000 Chinese stu- can always be corrected by expanding Messrs. Trump and Obama may have
rifice core values will grow un- dents that year. the definition. Opponents of a $15 min- different ideological bents, but no pres-
less schools stand up for academic freedom. Western schools also receive donations from imum wage are racist. Skeptics about a ident wants to be consumed by passing
Last week news broke that CUP blocked on- wealthy and influential Chinese. The daughter pending climate crisis are racist. Any- political furies. Every president over a
line access to 315 articles published in the jour- of former Chinese Premier Wen Jiabao gave 3.7 one questioning the utility of pulling longer horizon, we also semiconfi-
nal China Quarterly after its Chinese distributor million ($4.8 million) to Cambridge through her down old statues is racist. dently presume, would have a chief
relayed a threat from Beijing regulators. If CUP charitable foundation to fund a chair in Chinese The slippery slope of civil-rights magistrates willingness to let the true
erosion is manifest every time certain facts emerge and fill in public percep-
refused to take down the offending articles on Development studies. In 2014 the family of Ron- members of the vituperative left open tion of events.
sensitive topics such as Tibet and the 1989 Ti- nie Chan, a Hong Kong tycoon known for pro- their mouths. Many reputations are now tied to a
ananmen Square massacre, it was told, the peri- Beijing views, gave $350 million to Harvard Uni- Hard to escape is a lesson about in- false version of what Mr. Trump said,
odical would be banned in China. versity, the largest gift in its history. centives: Majoritarian violence is the and a version of events in Charlottes-
The publisher bowed to Chinese pressure Cambridge University Press is doing a booming predominant risk even when its targets ville that may or may not survive care-
without consulting China Quarterlys staff and business selling textbooks in China, with its most are people otherwise impossible to ful documentation. Dont expect moral
tried to keep its action quiet. After an email recent annual report boasting of double-digit year- sympathize with. courage or any apologies. Mobs are
from Editor Tim Pringle to his board leaked, CUP on-year growth for the past five years. The annual Which brings us back to Charlottes- mobs. Nazis whose every thought is
tried to portray the decision to block the articles Beijing International Book Fair opened Wednes- ville. Serious professionals in every reprehensible will still quail in the face
as a temporary measure. day, and the publisher acknowledged that it ini- field know first reports are unreliable. of a lawless crowd. CEOs of publicly
We arent counting certain modern- traded companies arent in the busi-
Academics who study China reacted angrily, tially hoped to resolve the conflict at that event.
day news sites, of course. Their job is ness of being brave.
circulating open letters of condemnation and pe- Chinese officials encourage the myth that manipulating passing, news-related And yet the natural order is hold-
titions to boycott the journal or move it to an- quiet remonstration will yield some relief from symbols in ways that pleasure their ing. Neo-Nazis and white supremacists
other publisher. On Monday CUP reversed course unreasonable demands. But as CUP has learned, target audiences. Bandwagons are may be a continuing American embar-
and announced that it would repost the offending not being transparent can damage the integrity their profession. rassment and eyesore, but they arent
articles online and make them freely available to of Western institutions. It also prevents universi- For the record, however, Donald todays most pressing threat to our
nonsubscribers. A terse statement from Cam- ties from forming a united front on specific prob- Trumps press conference, in its en- civil liberties.
bridge University suggested that it intervened lems such as the blocking of online articles.
to uphold the principle of academic freedom on
which the Universitys work is founded.
Western academics who displease Beijing
with their writings already risk being put on a
LETTERS TO THE EDITOR
Chinese authorities havent responded so far. visa blacklist that could impair their work. Now
But a state-run tabloid newspaper, the Global the Xi regime is starting to exploit financial le- Immigrant Worker Visas vs. Trumpian View
Times, wrote in an editorial last week, Western verage over Western institutions in their home Lest Trump administration offi- ket because of competition from visa
institutions have the freedom to choose. If they countries. This weeks events suggest that the cials dismiss the worker-visa short- holders is another way they get a
dont like the Chinese way, they can stop engag- best hope of preserving academic freedom lies age in America as a problem only for terrible deal.
ing with us. in openly discussing Chinese censorship. liberal northeastern enclaves like Here are some numbers worth
Marthas Vineyard, Id like to assure mentioning: My dads 1971 private-
you that the same problem has seri- college tuition was $1,200. Working a
The U.S. Navys McCain Moment ously hurt small businesses in Trump
country (Resort Is Finding Out How
12-week season, 40 hours a week at
$2.35, he made $1,12894% of his

T
he commander of the U.S. Navys Sev- routinely each day since 2001. Meantime, the size Much It Needs Foreign Labor, page tuition. My 2012 senior-year tuition
enth Fleet has been relieved of his duties of the battle force has dwindled 14%. The Navy one, Aug. 11). was $49,000. Working 40 hours a
Here in southeastern North Caro- week at $10 an hour for a 12-week
after a destroyer collided Monday with is now smaller than at any point in modern his- lina where a year ago Trump for summer season is $4,800, or less
a tanker near Singapore. The tory, with more ship retire- President signs far outnumbered than 10% of tuition.
cause of the incident is still un- Are sailors being pushed ments ahead. That translates those for Clinton-Kaine, some small If the fellow from the article who
known, but the investigation into missions without to longer and more frequent businesses that cater to the summer was renting rooms on the Vineyard
should go beyond the narrow deployments. influx of beachgoers on the Outer for more than $500 a night were
causes to ask if the collision is enough training? To sustain the high opera- Banks were unable to open this year willing to pay American college stu-
further evidence that the mili- tional tempo, ships must crash because they couldnt get the visas dents $25 an hour, they would be
tary is strained beyond what through scheduled mainte- required to bring in foreign workers moving from all over the country to
the force can tolerate. nance in between patrols. The demand for fast theyd employed in previous sea- work on the Vineyard.
The crash of the USS John S. McCain Monday turnover compresses time for the crew to train sons. For example, the Seaside Mar- DREW BROOKS
ket, a locally owned produce and Orleans, Mass.
resulted in the removal of Vice Admiral Joseph at home, which is essential for competence at sea.
fish business that operates only sea-
Aucoin due to a loss of confidence in his ability Sometimes ships are delayed in the yards, which sonally in the small town of Corolla, Two Massachusetts businessmen
to command. Ten sailors were initially reported can condense cycles for on-board qualifications has been closed this year because it lament a shortage of workers due to
missing. At least one body has since been found. for, say, aviators. This can become a lethal combi- hasnt been able to muster its usual President Trumps restrictions on
To investigate the incident, Chief of Naval Op- nation of less prepared sailors with less reliable labor force. temporary legal immigration. But are
erations Admiral John Richardson announced a equipment on more dangerous missions. If the nativist mood in Washington these businessmen capitalists? I sus-
pause in Navy operations around the world. Another question is tactical. The Navy has continues to crimp business in pect not.
There will also be a broader review of Navy pro- damaged two destroyers in the Pacific in one Trump-friendly outposts, Republicans A fudge-shop manager has real-
cedures in the Pacific theater, including training summer, and a smaller fleet means the force had best watch out in 2018. ized that his employees know you
and maintenance. This is warranted given multi- cant easily replace this capacity without losing JANET MILLIKEN need them more than they need
ple incidents at sea this year. manpower elsewhere. So what risks must the Corolla, N.C. you. A restaurant owner now deals
with the predicament that his work-
In June a merchant ship collided with the USS Navy accept during what may be the most dan-
This article speaks to the tremen- ers are free to change employers,
Fitzgerald, a guided-missile destroyer, in Japa- gerous time in the western Pacific since the end dous disadvantage all young people, protesting: If someone says, Ill
nese waters. The Navys incident report details of the Cold War? particularly low-skilled high-school give you 25 cents more an hour,
that the crew manning the helm at night didnt Similar dynamics are hurting the U.S. Army graduates, face in the U.S. While it theyre gone.
detect the danger. Seven sailors died, and last and Marines, the latter of which has had a pre- addresses the fact that Americans Supply and demand apply to goods
week the Navy relieved the ships commanding cipitous increase in fatal aviation accidents in are less willing to work hard for the and labor. Capitalism provides an im-
and executive officers, noting inadequate lead- recent years. Congress has for years approved wages offered by seasonal local mediate solution to these problems.
ership, which suggests failure by the crew. stopgap funding for the military, and the interim businesses ($10 to $12 an hour), it MIKE CASTELLANO
In May the USS Lake Champlain collided with measures undermine modernization and readi- isnt a moral flaw for them to ex- Ames, Iowa
a South Korean fishing boat, and in January the ness. The 2011 sequester cuts have hit every- pect a higher rate ($14 to $18 an
hour) that is closer to a living wage
USS Antietam ran aground in Tokyo Bay. Its thing from pilot proficiency to equipment. Letters intended for publication should
in Massachusetts. be addressed to: The Editor, 1211 Avenue
hard to credit all this merely to bad luck. The Navys review will be instructive, and the Aside from economic forces de- of the Americas, New York, NY 10036,
Whatever we learn about the McCain incident, families of the sailors on the McCain and Fitzger- pressing younger peoples savings or emailed to wsj.ltrs@wsj.com. Please
one reality is that the Navy has been conducting ald deserve an explanation. The larger question such as ballooning college tuition, in- include your city and state. All letters
missions across the oceans with less funding and is if the U.S. political class will prevent more need- creased health-care premiums and are subject to editing, and unpublished
fewer ships. Senior Navy officials told Congress less harm to the less than one percent of American unavailability of housingthe artifi- letters can be neither acknowledged nor
returned.
recently that about 100 ships have been deployed men and women who risk their lives for the rest. cially suppressed summer labor mar-
THE WALL STREET JOURNAL.
Was I Right to Pull the Plug on a Nazi Website?
By Matthew Prince
I
helped kick a group of neo-
Nazis off the internet last
week, but since then Ive
wondered whether I made
the right decision. Im the
co-founder and CEO of Cloudflare.
We run a global network that
makes internet applications faster
and protects them from cyber-
attacks. If you havent heard of us,
Im not surprised. Were part of
the internets infrastructure, one of
the groups operating behind the
scenes to bring you everything you
enjoy online.
Although Cloudflare isnt a
household name, nearly 10% of all
internet requests from 2.8 billion
people pass through our network
each month. We have almost 10 mil-
lion customers, from small busi-
nesses to large financial institutions.
A handful of private
companies control whether
speech can appear online.
Thats reason to worry.
During the 2016 presidential
election, 17 major-party candidates
used Cloudflare to protect their
campaigns from hackers. (Hillary
Clinton was the notable excep-
tion.) Chances are youve used our
network hundreds of times in the
past 24 hours and, if were doing
our job, all youve noticed is fast
internet.
Nearly all of our clients are up-
standing people and businesses. But
every once in a while, someone will
use one of our services to protect
content I would consider repugnant.
Trump Learns From Americas Failures in Afghanistan
By Vance Serchuk
S
ince the end of the Cold War,
one of the unfortunate pat-
terns in American foreign pol-
icy has been the tendency of new
presidents to denounce their prede-
cessors approach to the world
only to repeat their mistakes.
As the Trump administration de-
bated the way ahead in Afghani-
stan in recent months, it risked
falling into this trap. For all their
differences Donald Trump and Ba-
rack Obama both entered office
ambivalent about the flagging war
effort in South Asia. Each was sen-
sitive to the threat of terrorism
from the region, but viscerally re-
sistant to the militarys call for an
intensified commitment to a poten-
tial quagmire.
As in 2009, the result was a
drawn-out review in which com-
peting strategies were mootedin-
cluding some offering the seduc-
tive promise of achieving more by
doing less. But in his remarks
Monday night, Mr. Trump put for-
ward a framework for Afghanistan
and the surrounding region that
suggests he isnt repeating past
failures there but has learned the
right lessons from themeven
when they conflict with his own
instincts.
Two recent events
on either side of the
globe have under-
scored the impor-
tance of free
speechand the
POLITICS peril it faces today.
Just days ago,
& IDEAS
Cambridge Univer-
By William
A. Galston
sity Press yielded to
pressure from the
Chinese government
to remove more than 300 articles
from the website of its journal
China Quarterly. The censored arti-
cles covered topics that the Chinese
consider incriminating, such as the
Tiananmen Square massacre. The
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY
Rupert Murdoch
Executive Chairman, News Corp
Gerard Baker
Editor in Chief
Matthew J. Murray
Deputy Editor in Chief
DEPUTY MANAGING EDITORS:
Michael W. Miller, Senior Deputy;
Thorold Barker, Europe; Paul Beckett,
Washington; Andrew Dowell, Asia;
Christine Glancey, Operations;
Jennifer J. Hicks, Digital;
Neal Lipschutz, Standards; Alex Martin, News;
Shazna Nessa, Visuals; Ann Podd, Initiatives;
Matthew Rose, Enterprise;
Stephen Wisnefski, Professional News
Paul A. Gigot, Editor of the Editorial Page;
Daniel Henninger, Deputy Editor, Editorial Page
WALL STREET JOURNAL MANAGEMENT:
Suzi Watford, Marketing and Circulation;
Joseph B. Vincent, Operations;
Larry L. Hoffman, Production
EDITORIAL AND CORPORATE HEADQUARTERS:
1211 Avenue of the Americas, New York, N.Y., 10036
Telephone 1-800-DOWJONES
Such was the case with the Daily
Stormer, a bulletin board for self-
proclaimed white supremacists.
The site was used to help plan
the neo-Nazi demonstrations in
Charlottesville, Va. After Heather
Heyer was murdered there, the
Daily Stormers founder and edi-
tor mocked her as a fat, childless
32-year-old slut and a drain on
society.
By any reasonable standard it
was vile. Not surprisingly, the site
was constantly targeted by anti-Nazi
hackers trying to knock it offline.
Cloudflare had helped foil those cy-
berattacks until last week, when I
pulled the plug.
At some level, its easy to fire Na-
zis as customers. They dont pay
you much, if anything, since Cloud-
flare offers a free version of its ser-
vice. Our terms of use give us broad
discretion to choose whom we allow
to use our network.
Beyond the horrible content, the
Daily Stormer began claiming that
we secretly supported their ideol-
The first and most important of
these is the rejection of fixed time-
tables for U.S. withdrawal. Instead
the president is taking a conditions-
based approach that removes any
deadline for pulling out.
Thats significant because Amer-
icas recurring efforts to extricate it-
self from Afghanistanfrom the
Bush administrations push to hand
over the Afghan mission to NATO, to
the Obama administrations pledge
to bring all forces home by the end
of its term in officehave helped
foster the very conditions that have
forced the U.S. to stay.
This U.S. exit-seeking has encour-
aged the Taliban to think it can out-
last America on the battlefield, de-
terred Afghan civilians from siding
with the coalition and given re-
gional powers such as Pakistan in-
centives to hedge against the U.S.
by supporting insurgent groups.
Although by no means a guaran-
tee of success, the Trump adminis-
trations consideration of an open-
ended military commitment to
Afghanistan marks a sharp break
with past practice and creates new
possibilities to pursue a decent
outcome.
Mr. Trump was also correct to
place the Afghan crisis in a regional
context and to call out the Pakistani
military for sheltering Islamic ex-
The Global Assault on Free Speech
publisher was given the choice be-
tween accepting censorship and fac-
ing total exclusion from China, and
it chose to acquiesce. After an in-
ternational outcry, however, it re-
versed its position.
Chinas government wasnt
pleased. An editorial in the state-
run Global Times was chillingly
frank: Western institutions have
the freedom to choose. If they dont
like the Chinese way, they can stop
engaging with us. If they think
Chinas Internet market is so im-
portant that they cant miss out,
they need to respect Chinese law
and adapt to the Chinese way. It
doesnt matter if some arti-
Robert Thomson
Chief Executive Officer, News Corp
William Lewis
Chief Executive Officer and Publisher
DOW JONES MANAGEMENT:
Mark Musgrave, Chief People Officer;
Edward Roussel, Innovation & Communications;
Anna Sedgley, Chief Operating Officer & CFO;
Katie Vanneck-Smith, President
OPERATING EXECUTIVES:
Ramin Beheshti, Product & Technology;
Jason P. Conti, General Counsel;
Frank Filippo, Print Products & Services;
Steve Grycuk, Customer Service;
Kristin Heitmann, Transformation;
Nancy McNeill, Advertising & Corporate Sales;
Jonathan Wright, International
DJ Media Group:
Almar Latour, Publisher;
Kenneth Breen, Commercial
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
OPINION
ogy, causing a major distraction to
our team. Firing a Nazi customer
gets you glowing notes from around
the world thanking you for standing
up to hate.
But a week later, I continue to
worry about this power and the po-
tential precedent being set. The re-
ality of todays internet is that if
you are publishing anything even
remotely controversial, your site
will get cyberattacked. Without a
massive global network similar to
Cloudflares, it is nearly impossible
to withstand the barrage. Only a
small group of companiesnames
you know, such as Facebook, Google
and Microsoft, along with a handful
of others you may not, like Cloud-
flarehave sufficient scale to keep
their users online.
The upshot is that a few private
companies have effectively become
the gatekeepers to the public
squarethe blogs and social media
that serve as todays soapboxes and
pamphlets. If a handful of tech exec-
utives decide to block you from
tremists. Changing Islamabads
strategic calculus will require tre-
mendous ingenuity and tenacity.
But since a major reason for Paki-
stans support for terrorists has
been its belief it will need them as
proxies after Americas long-tele-
graphed exit from Afghanistan, a
sustained presence in Afghanistan
is the overdue first step to con-
fronting this problem.
By focusing on getting out
of the country, Bush and
Obama fostered conditions
that forced us to stay.
And Mr. Trump identified clearly
why a U.S. exit from Afghanistan
would court catastrophe, given the
probability its territory would again
be seized by terrorists to plot at-
tacks against the U.S.
The most problematic part of the
speech was when the president
sounded most like his predeces-
sorin his disavowal of nation
building. Reasonably enough, Mr.
Trump forswore telling Afghans
how to live or trying to re-create
their society in Americas image.
But as he acknowledged, the only
cles . . . disappear on the Chinese
internet.
There is a striking resemblance
between President Xi Jinpings
drive to extend Communist Party
control over information available
to the Chinese people and his gov-
ernments effort to appropriate the
fruits of foreign innovation for its
own nationalist purposes. As policy
experts across the political spec-
trum now recognize, and as the
Trump administration rightly in-
sists, companies seeking to do busi-
ness in China often are presented
with a choice: transfer control of
their intellectual property to Chi-
nese entities, or risk outright exclu-
sion from Chinas massive and rap-
idly growing market.
It is easy to understand Chinas
economic strategy. Innovation is the
heart of the 21st-century economy,
and coercing its transfer enables
China to reach the cutting edge while
its indigenous research-and-develop-
ment activities ramp up.
But why the heavy-handed sup-
pression of academic materials,
viewed by only a tiny number of
scholars?
This takes us to the heart of the
matter: Mr. Xi understands the
power of free speech and free in-
quiry to call into question even the
most entrenched claims that auto-
cratic governments use to justify
their rule. Allowing access to dis-
senting arguments and long-buried
facts about Tiananmen and Tibet
could have disruptive consequences.
No one knows what scholars would
write, who would be reading or how
they might react. Better to shut the
DAVID GOTHARD
their services, your content effec-
tively cant be on the internet.
Before terminating the Daily
Stormer, Cloudflares policy had
been to stay neutral to the content
that used our network. Wed comply
with the law in the jurisdictions
where we operate, but we wouldnt
bow to political or public pressure
to boot anyone off our network.
And make no mistake, there is
pressure: Hackers actually tweeted
to us asking that we get out of the
way so they could take down the
Daily Stormer.
When standing up to government
requests or angry Twitter demands
to silence unpopular speech, it was
powerful to be able to say wed
never terminated a customer due to
political pressure. Im not sure we
can say that anymore.
Id like to fall back on the First
Amendment of the U.S. Constitution.
Im the son of a journalist. I grew
up with discussions around the din-
ner table on the importance of free-
dom of speech. But the First
way for Afghans to shoulder more
of the burden in the shared fight
against terrorism is to build strong
institutions like the Afghan Na-
tional Army.
Success also requires an Afghan
state that isnt so corrupt or dys-
functional that it pushes the popu-
lation toward the Taliban, and that
is sufficiently inclusive of the coun-
trys major communities that they
have a stake in its success rather
than its failure.
None of this entails the U.S. un-
dertaking utopian social engineer-
ing in Afghanistan, but it does re-
quire much more than killing
terrorists. And it explains why the
U.S. has a national interest in
standing with Afghans who share
American values.
In his speech, Mr. Trump empha-
sized that continued U.S. support
would be contingent on improving
Afghan governance and politics.
That is more sensible than the
Obama approach, which committed
the U.S. to leave regardless of what
Afghans did. But identifying how
and where to exercise that U.S. le-
verage will require considerable
skill and savvy.
In this and other respects, while
the presidents framework gets
most of the big ideas right, success
will now turn on smart implementa-
door completely than to leave it
open even a crack.
This sense of the fragility of po-
litical power is more than auto-
cratic paranoia. In the former So-
viet Union, the writings of a few
brave men and women eroded the
Beijing censors an
academic publisher,
while U.S. academics
become censors.
regimes moral foundation. Commu-
nism collapsed in large measure be-
cause even those who claimed to
rule in its name ceased to believe in
its truth and virtue.
When times were good, this loss
of faith remained recessive. When
the economy faltered, it proved de-
cisivea lesson that Chinas leaders
surely have pondered.
i i i mayors would have used that power
Seven thousand miles to the
east, the neo-Nazi rally in Char-
lottesville, Va., sparked calls for the
suppression of hate speechbig-
oted rhetoric that any decent ob-
server would condemn.
Racism and anti-Semitism have
no place in any society, and cer-
tainly not in a society dedicated to
the proposition that all humans are
created equal. If these doctrines
contain no truth and yield only ill
effects, runs the argument, why not
prohibit their expression?
In academia, the critique of free-
dom of speech goes deeper. Many
Thursday, August 24, 2017 | A11
Amendment doesnt compel private
companies to let anyone broadcast
on their platforms. Moreover,
Cloudflare operates infrastructure
in 70 countries, few of which have
anything approaching American-
style speech protections.
Yet in all nations, there is (or
should be) a reasonable expectation
of due process. It is the idea that no
one is penalized without first re-
ceiving a fair hearing and a fair
shake. In civilized societies, the law
is applied equally by independent
decision makers, not capriciously by
mobs and tyrants.
Did we meet the standard of due
process in this case? I worry we
didnt. And at some level Im not
sure we ever could. It doesnt sit
right to have a private company, in-
visible but ubiquitous, making edito-
rial decisions about what can and
cannot be online. The pre-internet
analogy would be if Ma Bell listened
in on phone calls and could termi-
nate your line if it didnt like what
you were talking about.
Cloudflare is an expert at stop-
ping cyberattacks, but we dont
have the expertise to pass judgment
on which of our 20 trillion monthly
internet requests is racist, repre-
hensible or offensive. Even if we
could solve the technical challenge
of filtering them out, hidden behind
the scenes is a problem of political
legitimacy.
Were going to have a long de-
bate at Cloudflare to think these is-
sues over. But terminating the Daily
Stormer is likely to be the exception
that proves the importance of con-
tent neutrality. My moral compass
alone shouldnt determine who gets
to stay online.
Mr. Prince is the co-founder and
CEO of Cloudflare.
tion and wherewithal. Both will be
constantly tested.
Over the past 16 years, Wash-
ington has often described Af-
ghanistan as being in transition,
implying the countrys wrenching
but inexorable progress toward a
decisive endpoint, with Americas
own involvement there a fleeting
exigency.
But transition is a concept
that might better apply to Wash-
ingtons strategy itself. The U.S.
has approached Afghanistan since
9/11 with a typically American
mind-setas a discrete problem to
be solved, requiring a temporary
surge of effort, after which the
military can declare success and
go home.
There were strands of this think-
ing in Mondays speech. But in its
substance, the Trump framework
suggests the start of a reckoning
with a more difficult reality: that
Afghanistan is less a tactical battle
to be won than a strategic chal-
lenge, like the Korean Peninsula or
the Arabian Gulf, where the U.S. has
vital, enduring national interests
and therefore needs to remain en-
gaged for the foreseeable future.
Mr. Serchuk is an adjunct senior
fellow at the Center for a New
American Security.
scholars want to censor speech that
reinforces social imbalances, believ-
ing that it enhances the ability of
the powerful to subordinate the
powerless.
Writing in the New York Times,
K-Sue Park, the Critical Race Stud-
ies Fellow at the UCLA School of
Law, charges that the American
Civil Liberties Unions willingness
to offer legal support to right-wing
as well as left-wing causes perpet-
uates a misguided theory that all
radical views are equal. Her con-
clusion: The ACLU should reduce its
focus on First Amendment case law
and address restraints on freedom
of expression that stem from in-
equality in all its forms.
To this line of thinking, David
Cole, the ACLUs national legal di-
rector, offers a pointed retort: Al-
lowing government officials to reg-
ulate speech based on their assess-
ment of who is promoting equa-
lity . . . would be disastrous. How
does Mr. Park think that Southern
during the 1960s?
One of the few clear lessons of
history is that vesting any author-
ity with the power to control
speech is bound eventually to
backfire. Firm adherence to the
First Amendment of the U.S. Con-
stitution enables public officials to
impose reasonable time, place and
manner conditions on speechand
to act to pre-empt the violence
that may attend free expression in
fraught situations.
Government should go no fur-
thernot in China, not in America,
not anywhere.
A12 | Thursday, August 24, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

MUSIC

A Surprise Dance Album

Joshua Homme opens the steam valve for joy on Queens of the Stone Ages seventh release.
more, he says. In producing the
BY JOHN JURGENSEN
album Post Pop Depression and
touring with Mr. Pop, now 70, the
JOSHUA HOMMES height6 44-year-old rocker says that he
feet, 5 inchesis a big reason for learned how to age with integrity
the sweat-breaking pace of Feet in an art form that fetishizes
Dont Fail Me Now, the opening youth. In the new song Un-Re-
song of a new album by his rock born Again, Mr. Homme sings,
band Queens of the Stone Age. Everyone is drowning in the foun-
Thats the tempo I walk. Thats tain of youth.
my stride length, says the singer A less public force in QOTSAs
and guitarist, who was moving creative process came from a
down a sidewalk when the tune young visual artist from England
took shape in his mind. known as Boneface. After provid-
Movement is the message be- ing illustrations and animations
hind the bands seventh album, for the previous album, the band
Villains, which encourages lis- invited him to play a more immer-
teners to live with urgency and sive part in the new one. Boneface
gives them something to dance to occupied a desk in the recording
in the process. The heavy rock of studio and drew the songs as
Queens of the Stone Age, abbrevi- QOTSA wrote and recorded them.
ated QOTSA and formed by Mr. Mr. Homme describes Boneface
Homme 20 years ago in the after- as a visual partner whose illus-
math of grunge, has always had a trations helped build momentum in
MARK METCALFE/GETTY IMAGES

groove to it. But to push itself for- the studio (with guitarist Troy Van
ward, the band tightened the beat Leeuwen, keyboardist Dean Fertita,
and intensified the swing of its bassist Michael Shuman, drummer
new music. Jon Theodore, and co-producer and
Dancing is the the steam valve engineer Mark Rankin). Says Mr.
for joy, and I love being a part of Homme, When I see something
that, says Mr. Homme, whose mu- that hes drawn that really reso-
sic has also inspired mosh pits and nates, it refocuses my effort on lyri-
headbanging. His band recorded Josh Homme performs during Splendour in the Grass 2017 in Byron Bay, Australia. cal stuff and the conversation about
Villains with Mark Ronson, the songs and what theyre supposed to
producer whose song Uptown in Southern California where Mr. worth pursuing. The squirming and reprioritized my life so do. Saying it out loud also impacts
Funk had singer Bruno Mars Homme grew up and formed his fuzz-guitar line on new single The quickly. You want to talk about what hes doing visually and creates
dancing, along with countless wed- first band, the stoner rock group Evil Has Landed dates back 15 spring cleaning of people, relation- this circular excitement.
ding parties and proms. Kyuss. His sound also owes some- years, he says, but he and his ships, ideas? My priorities were so Domesticated Animals, a song
From Billboard charts to festival thing to a less sexy part of his bandmates only recently nailed it clear and I only had a few. Family, with a staggered rhythm and grim
stages, rock n roll is largely miss- roots: the polka lessons he took down. It was tied with monofila- friends, work. Thats it. lyrics about groupthink, led Bone-
ing in action as hip-hop, especially, when learning the guitar at age 9 ment lines to my brain, just drag- Around that time he also made face to draw a suited man snarling
defines pop culture. Comment-sec- because thats what the local mu- ging on the ocean floorif a riff is an album with a hero he had long out of a cone collar that a dog
tion critics online are divided over sic teacher favored. really good, Ill remember it. admired from afar, Iggy Pop. In ad- would wear after surgery. Bone-
Villains (out on Friday), with Its the best investment I ever After the more brooding 2013 dition to his huge musical impact face created the cover art for Vil-
some partisans of QOTSAs most made. When people hear about album Like Clockwork, Mr. (with proto-punk band the Stooges lains and his studio illustrations
muscular work suggesting that the [the polka period] they say, Oh Hommes music and outlook was and albums he made with David will be featured in the albums vi-
band has surrendered some ground. my God, its everywhere! Homme reshaped by both tragic and trium- Bowie in the late 1970s), Mr. Pop nyl release. In the modern age,
For Mr. Homme, making danceable says, pointing to the spiky phant events. In 2015, a side band offered the allure of a rock survi- the visual side has been relegated
songs isnt a concession to the mar- oompah, oompah that powered his that he formed with friend Jesse vor who withstood infamous sub- to a one inch by one inch thing,
ket forces of pop; its a natural step bands biggest hit single, 2002s Hughes, called Eagles of Death stance abuse and a gonzo perfor- Mr. Homme says, referring to the
for a band that has always stacked No One Knows. Metal, was at the center of the ter- mance style. Mr. Homme says he thumbnail images that accompany
its songs with melodic hooks and I feel like Ive been writing the rorist attack on Paris in 2015. Mr. long thought of Mr. Pop as an in- digital music files. Its so beauti-
an arch sense of humor. same riff for years, trying to get it Homme wasnt performing with take litmus test to rationalize his ful to see that music and images
QOTSAs signature tonehyp- right. Its not because its all I can the band at the Bataclan theater, own party levels. come together. Its almost like
notic, arid, ominousis often do; its because I know theres this where 90 people were killed. The Once I got to know him, those making conjoined twins instead of
identified with the desert setting perfect version out there and its shock and mourning reshuffled things didnt mean anything any- separating them.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are todays noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 13 Down 28 Couples word
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say 39 Brest friend
49 50 51 52 53 8 Part of a Bic 42 Rates highly
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d id 9 Subs single 46 Whiskey
59 60 61
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62 63 64 purchasers 47 Music may
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Ice THROW IN THE VOWEL | By Kristian House
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t...tstorms; r...rain; sf...snow flurries; sn...snow; i...ice setting an alarm Jenkins star inventor
Hanoi 29 26 r 31 25 t Paris 25 16 pc 28 18 t 50 Articles of faith arcs
Havana 31 23 pc 31 23 pc Philadelphia 28 17 s 26 15 pc might clear? 53 Conjunction
Today Tomorrow Hong Kong 33 28 t 33 27 t Phoenix 41 29 s 42 29 s 5 Black Mass star 54 Informal handle 13 Big Pharmas
31 Excuse me? with a slash
City Hi Lo W Hi Lo W Honolulu 30 24 pc 31 24 pc Pittsburgh 22 11 pc 22 11 pc 9 One of 150 in the 57 Cartoon robot wares
Amsterdam 21 13 pc 23 15 pc Houston 33 25 t 28 24 r Port-au-Prince 35 23 pc 36 24 pc
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Athens 31 23 s 31 22 s Jakarta 33 24 pc 33 25 pc Rio de Janeiro 24 17 pc 24 17 s 35 Trooper producer lion robots News 55 Plains people
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Atlanta 31 21 pc 30 21 pc Johannesburg 20 4 s 21 5 s Riyadh 42 28 pc 43 28 s
36 Subject of 59 Asteroids source 22 Giants legend 56 Pews setting
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2017 Dow Jones & Co. Inc. All rights reserved. 6DJ5547

BUSINESS & FINANCE
2017 Dow Jones & Company. All Rights Reserved.
Euro vs. Dollar 1.1801 0.33%
Chinese Deals Abroad Get Harder
Foreign governments
grow more skittish,
and Beijing restricts
irrational purchases
BY EMMA JOHANNINGSMEIER
After a record-breaking
year for Chinese acquisitions
of overseas companies and
other assets, the countrys in-
vestors are facing increas-
ingly wary regulators in for-
eign governmentsand a
Chinese government deter-
mined to control where they
put their money.
Chinas total outbound
mergers-and-acquisitions in-
vesting over the next 10 years
could total $1.5 trillion, a re-
cent report by international
law firm Linklaters predicted.
That is more than double the
total from the past decade, ac-
cording to Dealogic data, but
is roughly flat when compared
with current levels.
The first half of 2017 saw a
HEARD ON
THE STREET
By Stephen Wilmot
WPP Woes
Are Already
In the Price
Of Shares
The rough
patch faced by
WPP, the
worlds larg-
est advertis-
ing company,
has gotten rougher. But in-
vestors shouldnt forget that
WPP is a fundamentally
strong business, and its
shares are cheap relative to
their history and their peers.
The company reported
Wednesday that like-for-like
net sales growthits key
top-line growth measure
fell into the red in the sec-
ond quarter. Growth has
been slowing since last
summer, but nobody ex-
pected a contraction of
1.7%. The stock dropped 11%
in London.
Given the mixed signals,
speculating when things will
improve is a fruitless exer-
cise. On the one hand, WPP
Chief Executive Martin Sor-
rell expects full-year organic
growth of between zero and
1%, implying growth of be-
tween 1% and 3% in the sec-
ond half. Some clients that
clamped down on ad spend-
ing in the first half have said
they would now loosen their
purse strings. On the other
hand, the July numbers were
bad, with like-for-like net
sales down 2.6%.
Amid all the gloom about
WPPs sagging organic
growth, it is easy to forget
that the companys profits
are still rising, thanks to ac-
quisitions and a fairly flexi-
ble cost base.
Crucially, its problem also
still appears to be cyclical
pressure from big clients,
notably consumer compa-
nies that have their own
growth challenges, rather
than competition from me-
dia giants Google and Face-
book, or consulting firms
like Accenture.
The irony of the current
situation is that, just like its
consumer-goods clients, WPP
has an efficiency plan to
push its operating margin up
to just shy of 20%. This bot-
tom-line focus has done
wonders for stocks like Uni-
lever and Nestl this year,
but WPP remains deeply out
of favor.
WPP was one of this col-
umns summer stock picks.
Clearly, we called it too
early.
But with the shares trad-
ing at 11 times forward earn-
ings, the opportunity for
those prepared to invest
against the crowd is more
compelling than ever.
TECHNOLOGY: MUTUAL FUNDS CUT UBERS VALUE B3
FTSE 100 7382.65 0.01%
An Ant Financial stand at a 2016 exhibition in Shanghai. Ant is
seeking approval to acquire U.S. payment firm MoneyGram.
total of $72.6 billion of out-
bound M&A from China, with
Europe taking the largest
share. That is far below Chi-
nese outbound M&A of $129.3
billion in the first half of 2016,
a record for any half.
Among the forces driving
the sober forecasts and sharp
decrease are the Chinese gov-
ernments crackdown on what
it has described as irrational
Samsung mobile chief D.J. Koh, at center, introduces the Galaxy Note 8 smartphone during a launch event in New York on Wednesday.
Crisis Shaped Latest Galaxy Note
BY TIMOTHY W. MARTIN
NEW YORKSamsung
Electronics Co.s desire to
push the envelope on smart-
phone capabilities was se-
verely tested by last years
Galaxy Note 7 fiasco, where
fire-prone batteries triggered
a costly global recall.
But rather than cautiously
go on the defensive with the
new Galaxy Note 8, Samsung
mobile chief D.J. Koh in recent
months hammered home a
message internally to engi-
neers: Dont hold back.
If we are afraid of technol-
ogy innovation, we will die,
Mr. Koh said he told his engi-
neers, during an interview in
New York ahead of the launch
of Samsungs next smart-
phone. Do not hesitate to
take the next quick step.
On Wednesday, Samsung,
Cargill Invests in a Clean Meat Startup
BY JACOB BUNGE
Cargill Inc. is betting you
wont always need cattle to
make hamburgers.
The agricultural conglomer-
ate has invested in Memphis
Meats Inc., a startup develop-
ing technology to grow meat
from self-reproducing animal
cells. The stake marks the first
investment by a traditional
meat company in the nascent
clean meat sector, where
startups are creating products
they say are better for the en-
vironment than meat derived
from traditional feedlots and
slaughterhouses. Cargill and
Memphis didnt disclose the
size of the stake.
Meat companies are under
pressure from consumers to re-
duce their reliance on animal
drugs and to treat livestock
more humanely. Some have in-
vested in plant-based burgers
THE WALL STREET JOURNAL.
Gold 1288.90 0.30%
IMAGINECHINA/ZUMA PRESS
overseas dealssuch as for
expensive real estatethat
dont relate to investors core
businesses.
Although China hasnt dis-
couraged outbound investing
as such, it is applying a
stricter standard of approv-
ing investments that support
the national interest, accord-
ing to James Stent, a banker
and author of Chinas Bank-
the worlds largest smart-
phone maker, introduced its
new Galaxy Note 8, showcas-
ing several advances in a
phone that notably relies on a
less powerful battery than its
disgraced predecessor.
The latest incarnation of
the Galaxy Note phones boasts
Samsungs infinity display,
which covers nearly the entire
front of the phone and clocks
in at 6.3 inches. It is Sam-
sungs first handset to have a
dual-lens camera that makes it
easier to snap professional-
quality photographs, a feature
Apple Inc. introduced in last
years iPhone.
Mr. Koh is eager to show
consumers Samsung hasnt lost
a step after overheating batter-
ies forced it to pull last years
version from shelves. The fi-
asco ultimately cost it around
$6.5 billion and led to a wide-
Duck meat grown by Memphis Meats, which has Cargills backing.
and chicken strips, hoping to
win business from both vegetar-
ians and carnivores concerned
about the meat industrys heavy
use of crops and water.
Memphis and other startups
in the U.S. and Europe are
working on another route to
assuage those concerns: Using
Thursday, August 24, 2017 | B1
WTI crude 48.41 1.21% German Bund yield 0.377%
ing Transformation: The Un- where Chinese ownership
told Story. might raise national-security
Chinas government now concerns.
looks hard at overseas invest- Chinese forays into sectors
ments not arising out of core such as energy infrastructure,
business strategies or serving high-end technology and elec-
national interests, Mr. Stent tronics face particular scru-
said. It is restricting frivo- tiny abroad, the Linklaters re-
lous investments in overseas port said.
football teams, and by highly In one high-profile case,
leveraged financial conglom- Australia blocked Chinas
erates whose acquisitions State Grid Corp. and Hong
neither clearly serve the na- Kong-based Cheung Kong In-
tional interest nor arise out frastructure Holdings Ltd.
of a well-defined core busi- from taking a 50.4% stake in
ness strategy. the countrys largest electric-
On Friday, Chinese officials ity network, Ausgrid, out of
published official guidelines concerns for national security.
for overseas investment for At the time, Australian Trea-
the first time. The new rules surer Scott Morrison said, In
will restrict investment in sec- making this decision, national-
tors such as hotels and sports interest concerns have been
teams, but not technologies paramount.
such as computer chips. The range of companies
Also likely to influence Chi- likely to face resistance over
nese M&A investing are West- security worries also includes
ern governments moves to those involving payment-pro-
block Chinese companies from cessing systems and credit-
gaining too much control over rating systems, firms which
domestic infrastructure and might allow Chinese compa-
branching into industries Please see INVEST page B2
BRENDAN MCDERMID/REUTERS
spread ban on carrying the de- rial costs have often recently
vice onto aircraft over fears it surpassed those of the newest
was a fire-safety hazard. iPhone base model, even
The stakes are particularly though Apple charges more
high this year as rival Apple is for those devices, according to
expected to unveil a 10th-anni- market researcher IHS
versary version of its iPhone Markits analysis.
soon with advanced new fea- Apple has always been a
tures, and as Samsungs inter- study of discipline, and Sam-
nal estimates show more than sung has always been rushing
50 million people are out of to stuff in as much advance-
contract with their U.S. carri- ments as possible, said
ersand potentially up for Wayne Lam, a principal ana-
grabs for the South Korean lyst at IHS Markit.
company or its rivals. Samsung, in a January re-
The Galaxy Note series won port led by Mr. Koh, con-
fans by pushing the limit on cluded with three external
new features. Six years ago, firms it hired that the battery
the Galaxy Note was the first problems were caused by
mainstream plus-size phone manufacturing and design
and a variant to 2014s Galaxy problems.
Note 4 was the first to have a In response, Samsung ad-
curved screen. opted an eight-point battery
Last years version unveiled check, added protective brack-
an iris scanner that could un- ets around the battery and
lock the phone. Its raw-mate- Please see NOTE page B3
ducers of beef and poultry.
For people who want a prod-
uct from an animal welfare
perspective, we want this to be
JASON HENRY FOR THE WALL STREET JOURNAL
there for them.
Memphis on Wednesday
said Cargills investment was
part of $17 million in funding
that also drew from Bill Gates,
Richard Branson and venture-
capital firms Draper Fisher Jur-
vetson and Atomico. The com-
panies didnt provide details on
their individual investments.
Cell-cultured meats have
some way to go before landing
on dinner plates. Memphis
Chief Executive Uma Valeti
cell-culture technology to grow said his company, founded in
meat from living animal tissue 2015, can make a pound of
in stainless-steel cultivator
tanks.
meat for less than $2,400,
down from $18,000 last year.
This is another way to har- Meanwhile, regulators havent
vest meat, said Sonya Rob-
erts, head of growth ventures
decided how they will oversee
meat production that doesnt
in the meat division at Cargill, involve barns and butchers.
one of the worlds biggest pro- Please see MEAT page B2
10-Year Treasury yield 2.171%
Google,
Wal-Mart
Team Up
For Sales
BY JACK NICAS
AND LAURA STEVENS
Google and Wal-Mart
Stores Inc. are joining forces
in a partnership that includes
enabling voice-ordered pur-
chases from the retail giant on
Googles virtual assistant,
challenging rival Amazon.com
Inc.s grip on the next wave of
e-commerce.
Wal-Mart said Wednesday
that next month it will join
Googles online-shopping mar-
ketplace, Google Express.
While the deal will add hun-
dreds of thousands of Wal-
Mart items to Google Express,
it will also give Wal-Mart ac-
cess to voice ordering. The
deal wont alter how consum-
ers receive their orders, be-
cause Wal-Mart will fulfill pur-
chases made through Google
Express.
Consumers will be able to
order Wal-Mart goods from
the retailers stores by speak-
ing to Googles virtual assis-
tant, which sits in phones,
Googles voice-controlled
speakers and soon other de-
vices. Wal-Mart said it will
share consumers purchase
history with Google to enable
users to quickly reorder items,
a primary function of voice-
controlled orders for commod-
ity shopping.
How do you help people
who are going to be interacting
more and more with devices
get their weekly shopping
tasks taken care of? Google
Express chief Brian Elliott said
in an interview, citing a key
reason for the partnership.
The increasing importance
of voice shopping suggests
Wal-Mart and Google, part of
Alphabet Inc., need each other
to compete against Amazon.
Voice-controlled ordering is a
small but rapidly growing share
of online sales, analysts say,
and one of the top reasons to
use Amazons virtual assistant
Alexa and its Echo speakers.
Google has made signifi-
cant investments in natural
language processing and artifi-
cial intelligence to deliver a
powerful voice shopping expe-
rience, Marc Lore, Wal-Marts
head of e-commerce.
Amazon effectively in-
vented voice shopping, which
allows users to easily order
goods, like toilet paper and di-
apers, thanks to Amazons vast
data set on customers past
purchases. A significant por-
tion of online shopping is
made up of consumers reor-
dering the same staples. That
is well-adapted to voice order-
ing because a device can recall
the preferred brand, size and
type, without requiring shop-
pers to scan through different
product listings.
When I buy a product that
I dont care about, it is actu-
ally a pain for me to go to a
website and find an item and
Please see DEAL page B2
INSIDE
PATRICK T. FALLON/BLOOMBERG NEWS
FOOD DEAL
CLEARS
HURDLE
BUSINESS, B2
BANKS LEND
LIKE RATES
WONT RISE
FINANCE & MARKETS, B5
 B2 | Thursday, August 24, 2017
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in todays edition. Articles on regional page inserts arent cited in these indexes.
A
Accenture....................B1
Alphabet ................ B1,B3
Amazon.com.....A2,B1,B2
American Eagle
Outfitters..................B8
Apple......................B1,B2
Ashmore Group...........B8
Atomico.......................B1
Axel Springer..............A1
B Group.........................B5
Bashneft......................B2
Beijing Motor..............A5
Benchmark..................B3
BHP Billiton................B4
BlackRock...............B3,B8
C LG Electronics.............B3
Cargill Inc....................B1
Charles Schwab .......... B5
Citigroup......................B8
ConnectOne Bancorp..B5
Consumer Intelligence
Research Partners....B2
Costco Wholesale.......B2
Coty.............................B7
Credit Suisse...............B8
E Capital.......................B5
Elliott Management ... B4
Express........................B8
F the end of the year. Federal
Facebook......................B1
Fidelity Investments..B3
Franklin Resources ..... B8
G Rosneft..................B2,B8
General Electric .......... B3
INDEX TO PEOPLE
C Hudson, Denny............B5
Croft, Helima .............. B8
D Immelt, Jeff................B3
Dehn, Jan....................B8
E Sorrell, Martin............B1
Elliott, Brian ............... B1
G Koh, D.J.......................B1
Gruenberg, Martin......B5
Guarino, Donato..........B8
H M
Hildenbrand, Scott......B5
DEAL
Continued from the prior page
check out, said Forrester ana-
lyst Brendan Witcher, a for-
mer retail executive. If I can
simply say, send me dishwash-
ing soapand you send it,
thats much easier on me as a
consumer.
To make voice shopping eas-
ier, Wal-Mart said it will allow
users to link their Wal-Mart ac-
counts to Google Express, so a
Wal-Mart shopper who asks
the Google virtual assistant for
more toothpaste will get the
same brand she bought last
time.
The Wal-Mart-Google part-
nership comes as Amazon con-
tinues to expand its share of
online purchases. In July, Ama-
zon claimed nearly 45 cents out
of every dollar spent online, ac-
cording to receipt tracker Slice
Intelligence, up from about 43
cents at the start of the year.
Wal-Mart, in comparison,
claimed nearly 2 cents of each
dollar, holding steady.
Google launched Google Ex-
press in 2013 and steadily ex-
panded the service to reach
the full contiguous U.S. by late
last year. Google enlists third-
party firms to fulfill orders
from a variety of retailers, in-
cluding Target Corp., Costco
Wholesale Corp., Walgreens
Boots Alliance Inc., and
Whole Foods Market Inc.,
which Amazon agreed to buy
in June for $13.7 billion.
Google Express earns money
on commissions from those
merchants. Wal-Mart said it
would fulfill its Google Ex-
press orders itself, a new,
likely cheaper model for
Google.
Google said on Wednesday
that it is also dropping the
$95 annual fee for free ship-
ping on orders that reach a
given stores minimum cart
size, similar to a move Wal-
Mart made in January. Google
Express Mr. Elliott said the
company decided to offer free
shipping on such orders, with
a typical minimum of $25 or
$35, to make buying easier,
particularly when ordering
goods via voice interactions.
Wal-Mart will leverage
BRENDAN MCDERMID/REUTERS
Wal-Mart is planning to enter Googles online marketplace.
Goldman Sachs Group B8
Google ......................... B1
H
Hartford Funds ........... B3
Samsung
S
Electronics..........B1,B3
Sandler O'Neill +
Hewlett Packard
Partners....................B5
Enterprise.................B3 Saudi Arabian Oil.......A1
Hyundai Motors..........A5 Seacoast Banking.......B5
I Sistema.......................B2
SoftBank Group..........B3
Instacart......................B2
Stonemont Financial
Invesco ........................ B8
K T
Kia Motors..................A5
Target..........................B2
Kohl's...........................B8
T. Rowe Price
L Group..................B3,B8
Legg Mason.................B8 U by Amazon.com Inc., a key
Uber Technologies.B2,B3
M Unilever.......................B1
Macy's.........................B8 V
Memphis Meats..........B1
Vanguard Group..........B3
N Verizon
Nestle..........................B1 Communications......B3
Nordstrom...................B8 W Wednesday, the Austin, Texas-
O based company said. Amazon
Wahed Invest..............B5
Oak Street Real Estate Walgreens Boots
Alliance.....................B2
P Wal-Mart Stores.........B1
Walt Disney................B3
Petrleos de
Venezuela................B8 Wealthsimple
Financial....................B5
Power of Canada ........ B5
Whole Foods Market..B2
Principal Group...........B3
R WPP.......................A1,B1
Y have slumped in the past two
Royal Bank of Canada B5 Yandex.........................B3
McGratty, ChristopherB5
I Millon, James ............. B5
S tional changes at Whole
K Safdar, Khadeeja.........B2
Kalanick, Travis...........B3
Khoo, Jonathan...........B2 Sorrentino, Frank........B5
V
L Valeti, Uma.................B1
Lore, Marc...................B1 W
Whitman, Meg............B3
Markwell, Zack ........... B5 Witcher, Brendan........B2
Googles virtual assistant and
Echo competitor, the Google
Home, to make its goods avail-
able at the sound of a con-
sumers voice. Google, mean-
while, hopes access to Wal-
Marts inventory will help boost
engagement and sales of its as-
sistant and speakers. The part-
nership will enhance the selec-
tion and overall cachet of
Google Express, which com-
petes with delivery services
such as Instacart Inc. and Uber
Technologies Inc.
Amazon introduced the
Echo in 2014, a first-of-its-
kind voice-controlled smart
speaker, and sales quickly took
off. Google introduced its
Home speaker late last year,
and now has about 26% of the
market as of June 30, accord-
ing to Consumer Intelligence
Research Partners LLC. The
Echo has the rest. Apple Inc.
plans to start selling its smart
speaker in December.
More than half of Echo us-
ers have bought something on
their device, and about 30% of
those customers buy some-
thing at least once a week, ac-
cording to Consumer Intelli-
gence Research Partners
survey of 300 device users.
Google Home owners do so at
a much lower rate, the survey
says.
In recent weeks, Jonathan
Khoo, 40 years old, has or-
dered frequently from his
Echo, including Mr. Clean
Magic Erasers, Balance Bars,
Krazy Glue and BIC lighters.
Most of those are inexpensive
items that a shopper would
usually need to bundle with
other purchases to reach a de-
livery threshold. But they ship
as single items via voice, a
perk Mr. Khoo, a software de-
veloper, says has convinced
him to order more from his
Echo.
The battle between Wal-
Mart and Amazon has recently
taken on new intensity, most
notably with Amazons
planned acquisition of Whole
Foods, which heightens their
competition in groceries. Wal-
Mart this week said it is ex-
panding grocery-delivery tests
with Uber, and is testing de-
liveries by store workers.
Khadeeja Safdar
contributed to this article.
Takeover Clears Key Hurdle
Whole Foods says its
shareholders voted in
favor of $13.7 billion
deal with Amazon
BY HEATHER HADDON
Shareholders of Whole
Foods Market Inc. approved
the natural grocers takeover
step for the e-commerce giant
to seal its biggest play yet in
the more-than-$700 billion
food retail market.
The $13.7 billion deal, in-
cluding debt, was approved by
Whole Foods shareholders on
shareholders dont need to
sign off on the transaction.
Amazon and Whole Foods
both want to close the deal by
regulators in the U.S. are still
evaluating it. Whole Foods had
seen its stock lose more than
half of its value as its sales
years, with mainstream super-
markets starting to sell similar
natural and organic goods of-
ferings at lower prices.
The slump prompted activ-
ist investors this year to
push for board and opera-
Foods. That pressure drove
Whole Food executives to
Drilling by a Sistema unit in Russia in 2016. The company has been ordered to pay Rosneft $2.3 billion.
Rosneft Prevails With Suit
BY THOMAS GROVE
MOSCOWA regional arbi-
tration court on Wednesday
sided with Russian oil giant
PAO Rosneft, in a case seen as
a test of the countrys invest-
ment climate.
A judge in the Bashkiria re-
gion of Russia ruled that con-
glomerate AFK Sistema must
pay Rosneft 136 billion rubles
($2.3 billion) over its manage-
ment of oil producer Bashneft.
Rosneft had accused
Sistema, the former owner of
Bashneft, of destroying value in
the medium-size company and
removing assets from it.
Sistema had a controlling
share in Bashneft when the
government took over the oil
company in 2014, saying an ini-
tial privatization was void.
Rosneft subsequently bought
Bashneft in a sale criticized by
some Russian entrepreneurs.
Sistema said the restructur-
ing of Bashneftthe main issue
in the casewas done to pre-
pare the company for an initial
public offering. The case, which
was filed in May, has been
closely watched in Russia, in no
small part because state-owned
INVEST
Continued from the prior page
nies to gather consumer data.
I think were going to see a
lot of concern about ultimate
ownership of such companies,
said Ken DeWoskin, a senior
adviser for Deloittes Chinese
Services Group.
In the U.S. this year, several
deals have failed to get timely
approval from the Committee
on Foreign Investment in the
U.S. A $1.2 billion purchase of
Dallas-based payment firm
MoneyGram International Inc.
by Ant Financial Services
Group, which is controlled by
Chinese billionaire Jack Ma, a
co-founder of Alibaba Group
Holding Ltd., is among those
deals.
In July, The Wall Street
Journal reported that the
Committee on Foreign Invest-
ment in the U.S. hadnt ap-
proved the deal by a deadline,
BUSINESS & FINANCE
Regulators are evaluating the transaction, which would be the biggest U.S. retail merger so far this year.
agree to a deal with Amazon,
which is seeking to expand
its reach into food retail.
The deal is the biggest U.S.
retail merger so far this year,
and would be the third larg-
est since 1995, according to
Dealogic.
Shareholder proxy services
Institutional Shareholder Ser-
vices Inc. and Glass, Lewis &
Co. endorsed the merger de-
spite some concerns over a
Rosneft is run by Igor Sechin, a
former intelligence officer and
close ally of Russian President
Vladimir Putin.
Rosneft said it was pleased
with the decision, but the Rus-
sian news agency Interfax
quoted Rosneft spokesman
Mikhail Leontiev as saying the
company would decide whether
to appeal the decision, as the
award was less than the 170.6
billion rubles it had sought.
A spokesman for Sistema
said the absurd decision was
a blow against Russias econ-
omy and that the company
would appeal.
During a protracted proceed-
ing, a judge dismissed a num-
ber of motions from Sistema,
including a request to use inde-
pendent experts to determine
whether Sistema had hurt the
companys valuation. Sistema
officials said they were adding
value to the company during
their control, with their prepa-
rations for an IPO including the
restructuring of noncore assets,
the obligatory buyback of mi-
nority shareholders and the
cancellation of stock the trea-
sury owned in the company.
Rosnefts lawsuit against the
leading Ant to refile its appli-
cation.
In an op-ed column in the
Journal, U.S. Secretary of
Commerce Wilbur Ross wrote
that many governments
across the globe have pursued
policies that put American
workers and businesses at a
disadvantage, and added,
For these governments, Presi-
dent Trump and his adminis-
tration have a clear message:
It is time to rebalance your
trade policies so that they are
fair, free and reciprocal.
Some European lawmakers
have raised concerns about in-
creased Chinese investment in
Europe, citing a lack of reci-
procity for European compa-
nies investing in China as one
problem with the trend. But at
a European Union summit in
June, lawmakers rejected
French President Emmanuel
Macrons proposal to give
Brussels more control over
foreign investments in Europe.
At a national level, Ger-
THE WALL STREET JOURNAL.
PATRICK T. FALLON/BLOOMBERG NEWS
lack of a full sales process. tives under the deal.
Glass Lewis said increasing ISS expressed reservations
competition in the grocery about the cash and stock pay-
sector and questions sur- outs, which amount to $20
rounding Whole Foodss ability million to six officers if they
to improve its operations are replaced. But the proxy
makes the deal beneficial to service recommended share-
investors. holders vote for it, given the
Shareholders also approved payouts represent a fraction of
proposals to decrease the num- the stock value gains under a
ber of publicly traded Whole merger.
Foods shares by half, and to al- Laura Stevens
low payouts to company execu- contributed to this article.
MEAT
Continued from the prior page
Representatives for the U.S.
Food and Drug Administration
and Agriculture Department
said officials would need to de-
termine whether the cell-cul-
turing process is safe before
considering whether such
ANDREY RUDAKOV/BLOOMBERG NEWS
products count as meat. Mr.
Valeti said Memphis Meats is
talking with both agencies.
Makers of clean meat, a
spin on clean energy, will also
have to woo diners who have
gravitated toward more natu-
ral foods, free from artificial
ingredients and genetically
modified crops.
Cargill and other investors
acknowledge that Memphis
and its rivals likely wont win
over every steak connoisseur.
There are going to be con-
sumers and customers who are
conglomerate sent waves not going to be supportive of
through the Russian business this, Ms. Roberts said. They
community, which was already dont have to buy it, because
grappling with a recession we are going to be providing
brought on a drop in oil prices traditional protein.
and Western sanctions over the Memphiss cell-culture pro-
annexation of Crimea. duction process currently
In February, Russias top takes three to six weeks. Using
childrens goods retailer, samples from a range of
Detsky Mir, held the first major sources, including animals go-
IPO in the country since the an- ing to slaughter and those on
nexation of Crimea in 2014. farms or ranches, scientists
Sistema, the main owner of isolate cells that have the ca-
Detsky Mir, previously had put pacity to renew themselves
off plans for an IPO, and the and feed them oxygen and nu-
placement this year sent a sig- trients to produce skeletal
nal investors were starting to muscle. That meat can be
warm to Russia again. made into meatballs, burger
Timothy Ash, senior strate- patties and chicken strips.
gist at BlueBay Asset Manage- Proponents of the technol-
ment in London, said the case ogy say it could revolutionize a
has boosted worries that inves- meat production system that
tors may once again be de- uses much of the worlds crop-
terred by a politicized business land to feed billions of cattle,
environment. hogs and chickens. The United
It underscores the risk of Nations estimates that animals
doing business in Russia over- raised for meat consume a
all, he said. The interesting third of the worlds grain and
thing for me is the Russian use a quarter of all land for
macro story looks pretty good, grazing.
but on a structural reform/ A study published in Febru-
business environment side, I ary by researchers at Austra-
dont see much change. lias University of Queensland
Nathan Hodge found that about a third of 673
contributed to this article. respondents in the U.S. would
be willing to eat cell-cultured
meat regularly. Nearly half
many, the target of many Chi-
nese investors, has recently
expanded its governments
ability to block the takeover of
said they would choose it over
soy-based meat substitutes.
About one-fifth said they were
unlikely to try the meat or
German companies by inves- would refuse it.
tors outside the EU. Steve Jurvetson, a partner
Heavy financial backing at Draper Fisher Jurvetson
from the Chinese state for out- who will join Memphiss board
bound acquisitions that ad- of directors, said the visceral
vance its economic priorities, connection that cell-cultured
including targeted acquisitions products have with tradition-
of core technologies and im- ally raised meat will help them
portant parts of the global stand out from plant-based al-
value chain, enables Chinese ternatives.
investors to make attractive Stephen Giunta, culinary di-
offers abroad, said Bjrn Con- rector for Cargills meat divi-
rad, vice president of the Ber- sion and a master chef who
lin-based Mercator Institute once worked as President Ron-
for China Studies. ald Reagans personal cook,
But he cautioned that state was convinced by a Memphis
backing can create market dis- taste test in San Francisco. At
tortions that skew the compe- the June event, Mr. Giunta
tition in Chinese investors fa- pulled apart a slice of Mem-
vor. phiss duck meat with his fork,
Thats nice for the com- scrutinizing the muscle fibers
pany that is being acquired before eating it.
they get a good deal, Mr. It was a nice, clean flavor,
Conrad said. But its bad for Mr. Giunta said. It was some-
the overall macroeconomic thing Id absolutely serve to
structures. my kids.
THE WALL STREET JOURNAL.
Ubers Value Takes Hit at Mutual Funds
Four firms mark down
their investments in
ride-sharing company
by as much as 15%
BY ROLFE WINKLER
AND GREG BENSINGER
Four mutual-fund companies
have marked down their invest-
ments in Uber Technologies
Inc. by as much as 15%, the
first such price cuts suggesting
these investors are souring on
the ride-hailing giant following
a scandal-ridden year.
Vanguard Group, Principal
Financial Services and Hart-
ford Funds all marked down
their shares by 15% to $41.46 a
share for the quarter ended
June 30, according to the fund
companies latest disclosure
documents. T. Rowe Price
Group Inc. cut the estimated
price of its Uber shares by
about 12% to $42.70 for the
same period.
Ubers shares dont trade
publicly, so the mutual-fund
companies that hold them
must estimate the shares
worth each quarter.
Six mutual-fund companies
had mostly maintained a
$48.77 share price since the
PERSONAL TECHNOLOGY | By Geoffrey A. Fowler
Galaxy Note 8: Samsungs Big Phone Is Back
Samsungs
new Galaxy
Note 8 is a
Grande-size
smartphone
with Venti ex-
pectations.
It succeeds the Note 7,
which was perhaps the most
talked-about phone of
2017for all the wrong rea-
sons. And when the Note 8
arrives in stores Sept. 15, it
will go head-to-head against
Apples 10th-anniversary
iPhone in whats expected to
be the largest-ever season
for phone upgrades.
So what is Samsungs
strategy for breaking Apples
spell while also making us
forget about battery fires?
Rather than surprise, the
Note 8 mostly just super-
sizes the things that worked
well in this springs Galaxy
S8. Its screen measures 6.3
inches.
The Note 8s standout new
feature, a dual-lens camera,
will make other Samsung
owners jealous, but it only
just catches up to Apple.
When I had the chance to
try the Note 8 briefly, ahead
of its debut, it was clear this
is the phone to beat for any-
one looking to max out on
screen. In a form that is
slightly thinner and taller
than the iPhone 7 Plus, the
Note 8 packs about 20%
more screen.
Like the S8, the Note 8
squeezes in more usable
screen by slimming the
phones forehead and chin,
elongating the display. And
its infinity screen stays
trim on the sides by curving
down. That curve has a
sharper angle than past
Samsung phones, which
makes the Note 8 slightly
easier to hold.
Side by side, the Note 8
screen looks like a modest
boost from the S8+ model,
with a 6.2-inch screen, that
Samsung introduced in the
spring. But it will feel like an
Olympic-size swimming pool
for anyone still using the
two-year-old Note 5 or any
LG ELECTRONICS
Company is Planning
U.S. Car-Parts Facility
LG Electronics Inc. said
Wednesday that it will spend
about $25 million to build an
electric-car parts factory in the
Detroit suburb of Hazel Park,
Mich., as the company seeks
new engines of growth while it
reels from losses at its once-lu-
crative mobile business.
In a written statement, LG
said its new U.S. plant will pro-
duce battery packs for electric
cars. It will expand into other
components later.
The company began supply-
ing parts to General Motors Co.s
Chevrolet Bolt EV last year, pro-
fourth quarter of 2015, when
Uber first sold its shares to in-
vestors at that price.
Fidelity Investments held
its estimate of $48.77 as
of June 30.
The one outlier is Black-
Rock Inc., which wrote up the
shares slightly each of the past
two quarters, settling at $53.88
as of June 30.
Uber didnt have comment.
The mutual-fund companies
couldnt be reached or didnt
have comment.
Uber has struggled with a
string of scandals, executive
departures including the ouster
of its chief executive, and a
lawsuit from Alphabet Inc.
over allegedly stolen trade se-
crets. It also faces fallout from
a probe into its culture after al-
legations of sexual harassment
and sexism.
Ubers board, meanwhile, is
trying to fill the CEO position
after Travis Kalanick resigned
in June under investor pressure.
Uber board members are
again considering Hewlett
Packard Enterprise Co. CEO
Meg Whitman as a possible
candidate for the CEO job de-
spite her public statement last
month pulling herself from
contention, people familiar
with the matter said. Some di-
From left, a Samsung Galaxy S8, an S8+ and a Note 8 on display last week in New York.
iPhone.
Unfortunately, Samsung
still doesnt know where to
put the fingerprint reader.
The Note 8, like the S8,
moves it to the back of the
phone, awkwardly up near
the camera. Im still wait-
ing for a phone maker to
return the reader to the
front where it belongs,
maybe right in the screen
itself.
In the dont-break-what-
isnt-broken department, the
Note 8s S Pen stylus for
drawing and taking notes
hasnt changed much. One
new trick: Like a magic
wand, it can now translate
complete sentences, rather
than just words.
The Note 8s software has
Samsungs not-always-be-
loved version of Android,
which isnt much changed.
Theyve added the margin-
ally useful ability to pair
apps together into a single
launch icon. This will let you
load duos you frequently use
together, say, YouTube and
email or navigation and mu-
sic. To work, the apps them-
selves must be multiwindow
compatible.
The phone also has a ded-
icated button for Bixby, Sam-
sungs newborn voice assis-
tant. Bixby not only answers
duced mostly in its South Korea
plant. For LG, the Michigan plant
will be its first vehicle-compo-
nents factory in the U.S. The
Seoul-based company already
has existing production facilities
in five countries, including China,
Vietnam and Brazil.
Eun-Young Jeong
VERIZON COMMUNICATIONS
Carrier to Throttle
Video Streaming
Verizon Communications Inc.
said it would start limiting video
quality for all customers across
its network, months after the
No. 1 U.S. carrier by subscribers
launched unlimited data plans.
The video-throttling tech-
TECHNOLOGY
Uber has hit a rough patch, including the resignation of its CEO.
rectors have discussed in re-
cent days potentially putting
Ms. Whitmans name back on
Ubers short list of candidates,
which also includes General
Electric Co. Chairman Jeff Im-
melt. The thinking goes that if
a majority of Ubers eight-per-
son board were to vote to ap-
prove her as CEO, she could be
persuaded to come to the table
again, the people said.
Ms. Whitman said in a Twit-
ter message last month after
word of her candidacy became
public that I am not going
anywhere and Ubers CEO
will not be Meg Whitman. A
person familiar with her think-
questions but also operates
the entire phone (or at least
aspires to).
Now lets talk about that
hopefully nonexploding Note
NOTE
Continued from page B1
created diagnostics to ensure
safe charging currents and du-
ration. Samsung executives
made unannounced visits to
suppliers factories. And to in-
centivize quality, Mr. Koh
signed three-year contracts
with suppliers instead of an-
nual contracts.
When we designed the
Note 8, we knew we had to get
it right, Mr. Koh said.
The crisis required teams
across the Samsung mobile di-
visions global workforce of
165,000 people to band to-
gether and collaborate more
closely during weeks of con-
ference-room meetings, said
Tim Baxter, head of North
American operations for Sam-
sung Electronics. It forced
the company to work more
closely together, Mr. Baxter
said. The way we got work
done changed.
Despite the controversy,
Samsung executives say its
BUSINESS WATCH
nique, which is also employed by
rival carriers, came alongside
new data plans that effectively
raise the price of Verizons cur-
rent unlimited data offer. The
company said it would limit
video qualities for both users of
its unlimited plans as well as
customers with monthly
amounts of data.
Verizon said starting
Wednesday it would sell an un-
limited data plan that doesnt
stream videos in high definition,
starting at $75 a month for one
line, alongside an unlimited plan
with HD-quality video, starting
at $85 a month for one line.
(Both prices include discounts
for enrolling in automatic pay-
ments and paperless billing.)
The tiered unlimited plans il-
Thursday, August 24, 2017 | B3
declined to comment.
Amid all the controversies,
Uber has sought to shore up its
financials after reporting a loss
of more than $3 billion for last
year and $708 million in the
first quarter, according to peo-
ple familiar with the matter.
The company in July combined
JOE CASTRO/EPA/SHUTTERSTOCK
its money-losing Russian oper-
ations with Yandex NVs Yan-
dex.Taxi, the more popular
ride-hailing firm there.
Uber is also winding down
its U.S. subprime auto-leasing
business after realizing losses
per vehicle were $9,000 on av-
erage, 18 times what was previ-
ously believed, said people fa-
ing said on Tuesday that she miliar with the matter. Uber
stands by her prior statement. still had about $7 billion in
The CEO search is in flux af- cash at the end of the first
ter one of Ubers biggest inves- quarter, these people said, and
tors, Benchmark, sued Mr. Ka- its revenue totaled over $3 bil-
lanick in an effort to oust him lion in the three-month period,
from the board. The feud began up 18% from the fourth quarter.
earlier this month and has since Mutual-fund companies de-
spiraled into a broader battle termine the valuations for
among shareholders. closely held companies by a
Benchmark has been negoti- special committee that sits
ating for months a potential apart from the portfolio man-
deal with tech investor Soft- agers who buy and sell stocks.
Bank Group Corp. to sell part To value illiquid shares, such
of its stake at a discount to committees typically look to a
Ubers last valuation of nearly companys financial informa-
$70 billion, according to people tion, the value of publicly
familiar with the matter. traded rivals and share prices
Benchmark and SoftBank have paid by investors in previous
dent testing firm UL is pub-
licly vouching for the Note 8
battery, a significant im-
provement over the just-
trust-us approach Samsung
took with battery safety in
the S8.
The Note 8s dual 12-
megapixel camera is the fea-
ture most likely to make
other Samsung owners jeal-
ous. Just as on the iPhone 7
Plus, one lens is for wide an-
RICHARD DREW/ASSOCIATED PRESS
gle and the other for 2X
zoom. Samsung added opti-
cal image stabilization to
both its lenses, which it says
will produce clearer shots.
The iPhone 7 Plus has stabi-
lization only on the default
wide-angle lens.
Like the iPhone, the Note
8 can use depth informa-
tion from the two lenses to
8 battery. Its a tiny bit take portraits with only the
smaller this year, possibly subject in focus. The Note
helping it avoid some of the lets you manually adjust
problems that caused fires in how much background blur
last years model. Indepen- to applya feature Ive felt
brand has largely recovered to
prerecall levels. Samsungs
brand value rose 23% to $24
billion in 2017, more than
Galaxy S7, the firms previous
best seller.
The question for Samsung
isnt so much whether it can
three times the average com- woo back Galaxy Note fans,
panys growth over the past but rather whether it can at-
year, according to an annual tract new users. Samsung has
ranking by Kantar Millward experienced multiyear declines
Browns BrandZ, whose metric in its U.S. share of the pre-
measures consumer percep- mium market, defined as
tions and financial perfor- handsets selling at $500
mance. Samsung is probably wholesale or more.
the fastest recovery of all the Three and a half years ago,
historical crises Ive seen, Samsung had 30% of the U.S.
said Doreen Wang, BrandZs high-end market versus Ap-
global head. ples 60%, according to Bay-
Samsungs apparent re- Street Research LLC, using a
bound comes as smartphone 12-month rolling average. But
sales have inched upward this as of June, Samsung had fallen
year, rising 6% in the second to 22%, while Apple had grown
quarter from a year earlier, ac- to 73%.
cording to Strategy Analytics, Samsung cannot change
a market researcher. Samsung the trajectory of losing users
grabbed 22% of total ship- to Apple, said Cliff Mal-
ments, with Apple and Chinas donado, BayStreet Researchs
Huawei Technologies Co. each senior analyst, who tracks de-
recording 11%. vice sales. I dont think they
Mr. Koh said the well-re- ever can turn the tide.
viewed Galaxy S8, and its Before rising to become
larger S8+, have reached 20 Samsungs mobile chief in late
million shipments since going 2015, the 56-year-old Mr. Koh
on sale in April, outpacing helped develop the original
sales of its predecessorthe Galaxy Note phone and create
lustrate how wireless carriers Lee, an ESPN sports announcer
have struggled to make money named Robert Lee has been
off increased data usage. For pulled from covering a coming
years, carriers primarily sold University of Virginia football
capped plans that charged per game.
gigabyte of usage. But consum- ESPN said it made the deci-
ers, struggling to understand sion with Mr. Lee to take him
what constitutes a gigabyte, off the game and assign him
flocked to unlimited-data offers. elsewhere. The Sept. 2 game is
Ryan Knutson being streamed by ESPNs ACC
Network Extra.
ESPN We collectively made the
decision with Robert to switch
Announcer Robert Lee games as the tragic events in
Pulled From Game Charlottesville were unfolding,
simply because of the coinci-
In the wake of the violent dence of his name. In that mo-
clashes between white national- ment it felt right to all parties,
ists and counterprotesters in ESPN said. Its a shame that
Charlottesville, Va., stemming this is even a topic of conver-
from plans to remove a statute sation and we regret that who
of Confederate Gen. Robert E. calls play by play for a football
WSJ.com/Tech
funding rounds.
The mutual-fund firms gen-
erally dont discuss individual
investments in startups and
dont specify reasons for the
price changes in their disclo-
sure documents. The fluctua-
tions have frustrated startup
chief executives and venture
capitalists, many of whom as-
sumed the firms would hold
the investments at cost after
investing.
At least seven mutual-fund
companies own shares in Uber,
several of them first buying in
during a 2014 funding round at
$15.51 a share. The price has
roughly tripled since then
through a series of funding
rounds, but Uber hasnt raised
new capital since last year at
the $48.77 price.
Mutual funds have histori-
cally waited until initial public
offerings or later to invest in
young companies. In recent
years, startups began staying
private longer, opting for lucra-
tive fundraising rounds rather
than bothering with financial
disclosures and securities regu-
lation. Spurred in part by rock-
bottom interest rates, mutual
funds in 2013 began gobbling
up stakes in companies that
seemed destined for a public
offering.
was lacking on the iPhones
Portrait Mode. (On the
Note 8, you can even adjust
it after you take the pic-
ture.
The Note 8, available in
presales on Aug. 24, is too
big for my taste. I think the
Samsung Galaxy S8 offers
just the right amount of
screen, 5.8 inches, in a slen-
der package. But by offering
a supersize line, Samsung re-
tains loyal customers who
want choice.
And the Note 8 main-
tains Samsungs lead on
phone design. The new
norm for a premium phone
in 2017 is a dual-lens cam-
era and a reduced-bezel
shape with a huge screen.
But there is still room for
Apple to impress this fall
by fixing the fingerprint
reader, addressing battery
lifeand perhaps identify-
ing something we didnt
even know we wanted.
its S Pen stylus. Despite last
years woes, Samsung execu-
tives never seriously consid-
ered discontinuing the Galaxy
Note or skipping this years
release and waiting for next
year, he said.
Internally, Mr. Koh told
Samsung employees: I will
not give up on the Note se-
ries.
game has become an issue.
The change, which was first
reported by the sports blog
Outkick the Coverage, drew im-
mediate criticism on Twitter
and elsewhere, with ESPN be-
ing mocked for worrying that
people would be upset by a
broadcaster named Robert Lee
calling a game in Charlottes-
ville.
ESPN executives felt that
Mr. Lee would likely face jokes
and mocking on Twitter for his
name while calling that particu-
lar game and wanted to spare
him the negative attention, a
person familiar with the net-
works thinking said.
ESPN is majority-owned by
Walt Disney Co.
Joe Flint
B4 | Thursday, August 24, 2017 THE WALL STREET JOURNAL.

BUSINESS NEWS

BHP Makes Board Changes Amid Elliotts Pressure

BY ROBB M. STEWART Elliotts agitation, made Chairman Jac Nasser said Mr. last year. He faced a backlash
public in April after months of King had decided not to stand in Australia at the end of his
MELBOURNE, Australia talks, brought into the open for election to the board at the tenure over the companys
BHP Billiton said it plans to shareholder disquiet over annual meeting because of debt-fueled investment in one
replace two directors amid its BHPs mistimed investment in concerns expressed by some of three gas-export projects in
monthslong tussle with activ- shale as well as its subsequent investors. Mr. Brinded has Queensland state that was
ist investor Elliott Manage- impairment charges. The opted not to stand for re-elec- launched amid a slump in
ment Corp., after the mining hedge funds tussle with the tion as a nonexecutive director prices, weighing heavily on the

ANDREW MACKENZIE/BLOOMBERG NEWS

companys decision earlier this British-Australian company because of his involvement in companys share price.
week to exit its American threatened to cast a shadow continuing legal action in Italy Mr. Brinded, a director
shale oil and gas business. over annual shareholder meet- related to his past employ- since April 2004, will step
Elliot has built a 5% stake ings in October and November, ment at Royal Dutch Shell down from the board in Octo-
in BHPs British shares, and when shareholders are to vote PLC, Mr. Nasser said. ber, although Mr. Nasser said
specifically called on BHP to on board members. In their place, the resource he looked forward to him be-
leave the U.S. shale business. Among its proposals, Elliott companys board will bring in ing able to return in the fu-
Elliott and others have called had called for the appointment Terry Bowen, finance director ture. He chose to leave given
for deeper changes, including of Chairman-elect Ken Mac- at Australian coal and retailing his involvement in continuing
adding more industry veterans Kenzie to be followed by new gorup Wesfarmers Ltd., and legal proceedings in Italy re-
to the board. directors with skills to sim- Mining company BHP said it plans to replace two directors. former BP PLC veteran John lated to Shell, where he was a
It wasnt clear whether El- plify BHPs structure, improve Mogford, starting in October. director between 2002 and
liott had a role in the board returns and allocate capital finance- and energy-industry pany Akzo Nobel NV to discuss Mr. Nasser, who will step 2012. Italian prosecutors are
changes BHP detailed Wednes- more wisely. Other share- experience between them. a merger with U.S. rival PPG down as chairman at the end investigating Shells involve-
day, including the departure of holders had sounded out po- Whether a direct response Industries Inc. ultimately of the month, said he regret- ment in a US$1.3 billion deal
Grant King just six months af- tential board nominees more to Elliott or not, the board wasnt successful. It also hit ted that Mr. King would also in 2011 with Italian oil firm
ter his appointment. The New sympathetic to focusing on shuffle is another victory for resistance from Australias leave the board at the end of Eni SpA and the Nigerian gov-
York hedge fund declined to shareholder returns. the activist fund, which has government to a proposal that the month. ernment for a lucrative Atlan-
comment. BHP stressed the Mr. Kings departure is a had mixed success effecting BHPs dual structure be col- Mr. King led Origin Energy tic Ocean oil license.
decisions by Mr. King and Mal- victory for investors unhappy change at some of its overseas lapsed around a single main after it was spun off from Neither Mr. King nor Mr.
colm Brinded to step down with his appointment. The targets recently. A bid by El- listing in London. building-products company Brinded were immediately
were their own. new directors bring decades of liott to force Dutch paint com- On Wednesday, outgoing Boral Ltd. in early 2000 until reachable for comment.

ADVERTISEMENT

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 THE WALL STREET JOURNAL.
Ruling
Clarifies
Law on
Insider
Trading
BY NICOLE HONG
A federal court upheld the
2014 insider-trading convic-
tion of former SAC Capital Ad-
visors LP portfolio manager
Mathew Martoma, in a ruling
that could ease the govern-
ments ability to prosecute
corporate insiders.
In a 2-1 opinion, the Second
U.S. Circuit Court of Appeals in
Manhattan rejected Mr. Mar-
tomas request for a new trial,
saying the jury was properly
instructed. It also found the
government adequately
showed at trial the tipper re-
ceived a financial benefit from
providing inside information to
Mr. Martoma, which is key to
proving insider-trading crimes.
Mr. Martoma is serving a
nine-year sentence after a jury
convicted him of trading on
inside information provided by
two doctors about the trial of
an Alzheimers drug.
Joon Kim, the acting Man-
hattan U.S. attorney, said in a
statement he was gratified by
the ruling. A lawyer for Mr.
Martoma didnt respond to re-
quests for comment.
At the heart of Mr. Mar-
tomas appeal was a question
about what the government
must show to convict someone
of insider trading.
Wednesdays ruling rejected
part of a 2014 Second Circuit
opinion in a case known as
U.S. v. Newman that said the
government must prove the
tipper and tippee have a
meaningfully close personal
relationship to win a convic-
tion. Mr. Martomas oral ap-
peals argument had focused
on whether he and the doctors
shared such a relationship.
After the Newman decision,
the Manhattan U.S. attorneys
office dismissed charges
against seven men who had
been convicted of insider trad-
ing, including two former SAC
employees. The office kept Mr.
Martomas conviction in place
because the evidence at trial
showed Mr. Martoma had paid
for confidential information.
The Newman decision also
said the government needed to
prove the tipper gained a tan-
gible reward, or personal
benefit, for providing infor-
mation. But in a 2016 Supreme
Court ruling known as Salman
v. U.S., the justices said prov-
ing a tipper and trader were
relatives was enough to bring
a criminal prosecution.
Mr. Martomas first appeal
was argued in 2015, but the
judges ordered a reargument
after the Salman decision.
Citing the Salman decision,
Chief Judge Robert Katzmann
wrote in Wednesdays opinion
that insiders can personally
benefit from disclosing inside
information as a gift even
without a close relationship
with the tippee.
Judge Katzmann said a
businessman that gives an in-
sider tip to his doorman as an
end-of-year gift would be com-
mitting illegal insider trading,
even if he and the doorman
werent close friends. The
judges said Mr. Martoma met
with one doctor more than 40
times and paid him $1,000 an
hour to feed him information.
White-collar lawyers called
the ruling a major step in clar-
ifying insider-trading law.
It is significant for the in-
dustry because it removes an
additional hurdle for prosecu-
tors in bringing insider trad-
ing cases, said Antonia Apps,
a partner at Milbank Tweed
Hadley & McCloy LLP who
prosecuted the Newman case.
EDUARDO MUNOZ/REUTERS
Mathew Martoma, in 2014
Banks Lend as if Rates Wont Rise
BY RACHEL LOUISE ENSIGN
After years of waiting for in-
terest rates to rise, some banks
are lending as if that day will
never come, loading up on a re-
cord amount of loans and secu-
rities that carry low rates for
long periods.
The percentage of bank as-
sets that wont mature or
change rates for more than five
years reached a high in the sec-
ond quarter, according to Fed-
eral Deposit Insurance Corp.
data released Tuesday. That
means banks are allowing more
borrowers to lock in low rates
for long periods, a potential
risk should rates move sharply
higher.
The interest-rate environ-
ment and competitive lending
conditions continue to pose
challenges for many institu-
tions. Some banks have re-
sponded to this environment by
reaching for yield through
higher-risk and longer-term as-
sets, FDIC Chairman Martin
Gruenberg said in remarks ac-
companying the data.
Banks largely make money in
two ways: from lending and
fees. Midsize and smaller lend-
ers tend to rely more on lend-
ing profits than bigger banks
that have fee businesses like
wealth management. Lending
profits typically come from the
difference between what banks
pay out on deposits and what
they earn on loans and securi-
ties.
But rock-bottom interest
rates following the financial cri-
sis eroded those margins across
the industry, leading some
banks to lend for longer so they
can capture more yield. In-
creasing their volume of loans
also helped them compensate.
Its a struggle for every-
body in the industry, said
Denny Hudson, chief executive
Property Deal Highlights Demand Canadian
BY ESTHER FUNG
Stonemont Financial
Group, an Atlanta-based real-
estate-management firm, is
buying a 100-property portfo-
lio of office, industrial and re-
tail holdings across 20 states
for $1.3 billion, saying demand
for properties with invest-
ment-grade tenants remains
strong.
The deal, Stonemonts larg-
est acquisition ever, was
fueled in part by debt capital
seeking to finance strong real-
estate portfolios, the company
said Wednesday.
We were able to hit the
debt market at an optimal
time, securing very attractive
acquisition financing that will
ultimately be recapitalized as
part of the longer-term strat-
egy of the fund, said Zack
Markwell, Stonemont Finan-
cials chief executive and man-
aging principal.
Stonemont recently
launched a fund focused on
long-term, diversified assets
with investment-grade yield.
This is the funds first acquisi-
tion.
The seller of the portfolio,
Chicago-based private-equity
Robo-Adviser Aims at Muslim Investors
BY DAVID GEORGE-COSH
The Toronto-based auto-
mated-investment provider
Wealthsimple Financial Inc.
introduced a Shariah-compli-
ant portfolio targeting U.S.
and Canadian investors in a
move to expand its product of-
ferings in an increasingly
crowded robo-adviser market.
Robo-advisers have recently
emerged as a popular segment
of the market among passive
individual investors seeking
lower management fees and a
reliable return on investment.
However, the space has be-
come crowded, with compa-
nies such as Charles Schwab
Corp. and Bank of America
Corp. launching their own
robo-adviser offerings along-
side startups such as Wealth-
front Inc. and Betterment.
Robo-advisers are likely to
report double-digit growth in
assets under management in
coming years from a base of
less than $100 billion in 2016,
according to a report released
by Fitch Ratings Inc. last
month. The Fitch report cited
a recent study by KPMG that
estimates robo-advisers as-
sets under management will
FINANCE & MARKETS
Going Long
Bank assets with terms greater than ve years as a percentage of total assets, quarterly
25% Recessions
20
15
10
5
0
1984 90
Source: Federal Deposit Insurance Corp.
of Stuart, Fla.-based Seacoast
Banking Corp., which has $5.3
billion in assets. He said his
firm tried to keep its lending in
check, but added there is a
downside to being too careful.
You could be smart all day
long waiting for rates to in-
crease, and youll get killed by
investors rooting for loan
growth, Mr. Hudson said.
Regulators and bank inves-
tors typically worry about in-
terest-rate risk because banks
borrow money at low rates on a
short-term basis, usually by
taking deposits, and lend it out
at higher rates for a longer
term. By locking in longer
terms for loans at lower rates,
banks could face a profit
squeeze if they have to raise
deposit rates sharply in the fu-
ture.
An added worry: Much of
this lending for longer is in the
booming area of commercial
real estate, in which borrowers
finance offices and apartment
buildings typically with loans
that have fixed-rate periods
Stonemont Financials deal included a MetLife campus in New Jersey.
real-estate firm Oak Street
Real Estate Capital, will con-
tinue to provide management
services to Stonemont.
The acquisition was struc-
tured with $1.1 billion in fi-
nancing, including $800 mil-
lion from floating-rate loans
packaged into commercial
mortgage-backed securities
and two levels of mezzanine
financing totaling $274 mil-
lion. The remainder was in eq-
uity. CBRE Capital Markets
Debt & Structured Finance
total more than $2 trillion by
the end of 2020.
Wealthsimples Halal In-
vesting portfolio is aimed at
setting the company apart
from its peers, said Michael
Katchen, the companys chief
executive and co-founder.
The Muslim community in
North America is extremely
large and underserviced, Mr.
Katchen said. He expects the
portfolios interest to closely
mirror the companys socially
responsible products, which
began as a niche offering and
grew to one of its biggest ser-
vices.
The new portfolio will track
a group of 50 companies
traded in the U.S. and Canada
that dont generate more than
5% of their revenue from alco-
hol, tobacco, gambling or pork
production, and dont make
significant income from inter-
est. Wealthsimples fees are a
flat 0.5% for the first $100,000
invested and drop to 0.4% on
any additional investment.
Mr. Katchen said there is a
lack of affordable options
aimed at Muslim investors,
which opened the opportunity
for the company to develop its
own offering. He cited the
2000
from three to 10 years.
Every meeting I went to,
bankers said, Were not going
to go past five years on com-
mercial real estate, said Scott
Hildenbrand, chief balance
sheet strategist at Sandler
ONeill + Partners. Within a
year or so, the bankers were
saying, Were not going to go
past 10 years.
Englewood Cliffs, N.J.-based
ConnectOne Bancorp Inc. has
expanded quickly in recent
years largely through commer-
cial real-estate lending. These
loans made up more than half
of the banks assets at the end
of 2016 and most of them were
originated in the past three
years, the bank said.
Competition for such bor-
rowers was fierce, though it has
slowed a bit in recent months
after regulators raised concerns
about the sector broadly, Chief
Executive Frank Sorrentino said
in an interview. While Mr. Sor-
rentino said his bank, which
has $4.7 billion in assets, has
expertise in the sector that
team secured the financing
from J.P. Morgan Chase, with
Deutsche Bank and Barclays as
co-lenders, said CBRE, which
also brokered the transaction.
The portfolio of buildings
derives 96% of its net operat-
ing income from investment-
grade tenants with an average
lease of about 12 years. They
include six campuses occupied
by MetLife Inc., as well as of-
fices occupied by Mylan Tech-
nologies Inc. and Ericsson AB,
and stores that have such ten-
Global Iman Fund managed by
Global Growth Assets Inc.,
with a management fee of
2.82%, as a competitor. An-
other rival is New York-based
Wahed Invest, which offers
Shariah-compliant invest-
ments with management fees
ranging from 0.29% to 0.99%.
This is a way for people to
achieve their long-term goals
and make it acceptable to a
group which hasnt had that
kind of option in the past, Mr.
Katchen said.
Privately held Wealthsimple
has raised 100 million Cana-
dian dollars ($79.6 million)
over several funding rounds
over the past three years led
by a subsidiary of the Power
Advertisement
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10
THE WALL STREET JOURNAL.
serves it well, his firm has re-
cently started to diversify lend-
ing.
Theres risk in everything
that we do, Mr. Sorrentino
said of banking. Thats what
we do, take credit risk and in-
terest-rate risk.
Across all banks, the per-
centage of total assets that are
at a fixed rate for more than
five years was 27.5% in the sec-
ond quarter of 2017, its highest
since the FDIC started tracking
it in 1984. The metric reached
33.7% in the second quarter at
banks with $1 billion to $10 bil-
lion in assets.
Commercial real-estate loans
made up 31.5% of assets at
those midsize and smaller
banks in the quarter, up from
25.7% in the second quarter of
2012. The figure is far lower at
bigger banks, at 6.4%, and has
remained steady in recent
years.
So far, the reach for yield
hasnt proved a problem as
long-term rates have remained
low, despite the Federal Re-
ants as Dollar General. The
portfolio is 100% occupied.
While financing could be
harder to come by for riskier
property projects, lenders still
favor top-tier assets, espe-
cially those judged to be as
creditworthy as investment-
rated corporate bonds.
Theres a lot of capital
chasing good-quality assets,
said James Millon, executive
vice president in debt and
structured finance at CBRE.
Issuance of commercial
mortgage-backed securities
amounted to more than $21.2
OJ-BC880
billion in the second quarter,
doubling the $10.5 billion re-
corded in the first quarter, ac-
cording to real-estate research
firm Trepp Inc. The market
has been adapting to the new
rules implemented late last
year that required issuers of
commercial mortgage-backed
securities to keep at least 5%
of the bonds they create.
Overall, the market has
gained a better sense of how
the process is carried out un-
der risk retention, and new
benchmark pricing levels for
these deal types are slowly
stabilizing, Trepp said in a
recent research note.
Corporation of Canada Inc., a
Canadian-based financial-ser-
vices company controlled by
the Desmarais family. Mr.
Katchen said he expects to tap
another round of venture
funding before seeking an ini-
tial public offering.
The company has more
than $1 billion in assets under
management and operates in
the U.S. and Canada. It plans
to launch in the U.K. next
month, Mr. Katchen said. The
company was founded in 2014
and has about 130 employees.
Theres a very long-term
partnership [with Power
Corp.] where were not going
to sell ourselves in the in-
terim, Mr. Katchen said.
INTERNATIONAL INVESTMENT FUNDS
FUND NAME
n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
CAM-GTF Limited
For information about listing your funds,
please contact: Freda Fung tel: +852 2831
2504; email: freda.fung@wsj.com
Thursday, August 24, 2017 | B5
serve increasing short-term
rates. The yield on the 10-year
Treasury has been around
2.20% of late and hasnt
touched the 3% mark since
early 2014. At the same time,
credit quality of loans has
stayed strong.
Indeed, the FDIC said in its
report Tuesday that U.S. banks
earnings rose 11% to $48.3 bil-
lion in the second quarter from
a year earlier, indicating the
sector is continuing its postcri-
sis recovery. Nearly two-thirds
of banks reported their earn-
ings were up from a year ear-
lier.
The FDIC cautioned that the
pace of loan growth is waning.
U.S. banks had about $9.4 tril-
lion in net loans and leases in
the second quarter. While that
was up 4% from a year earlier,
the rate of growth is down from
a 7% pace in much of 2016.
Problem loans also contin-
ued to decline, with banks re-
porting a 6.7% decrease in loans
that were 90 days or more past
due in the second quarter com-
pared with a year earlier.
Still, regulators have warned
that the increasing share of lon-
ger-term and commercial real-
estate loans at some banks
could be risky. A heavy concen-
tration in commercial real-es-
tate loans could become an is-
sue if credit issues begin to
crop up.
Between 2015 and early 2017,
commercial real-estate loans
generally rose at a pace above a
10% annual rate at smaller lend-
ers, according to Federal Re-
serve data.
This was generally what
they knew and knew well,
Christopher McGratty, an ana-
lyst at Keefe, Bruyette &
Woods, said of commercial real-
estate lending at smaller banks.
Rachel Witkowski
contributed to this article.
Bank
Increases
Dividend
BY CARA LOMBARDO
Royal Bank of Canadas fis-
cal third-quarter profit topped
expectations amid growth in
its wealth-management busi-
ness, even as unfavorable mar-
ket conditions caused revenue
to slide.
Canadas largest bank by rev-
enue also announced a 5% in-
crease in its quarterly dividend,
the second time it has raised
the payout by 5% this year.
The Toronto-based bank
posted a quarterly profit of 2.8
billion Canadian dollars
(US$2.23 billion), or C$1.85 a
share, relatively unchanged
from a year ago but slightly
more than analysts polled by
Thomson Reuters expected.
Revenue, meanwhile, slipped
3% to C$9.99 billion from
C$10.26 billion.
Net income from RBCs
wealth-management segment
jumped 25%, mainly due to
larger asset balances and
higher interest rates. RBCs
net interest income inched up
3% while fee-based income
dropped 7%.
RBC also saw noninterest
expense rise 7% from a year
earlier, as salaries increased
and the company spent more
on severance costs and mar-
keting and public relations.
Chief Executive Dave McKay
said the bank has been invest-
ing in digital capabilities and
key markets to drive growth.
Still, RBC has had to contend
with a slowing Canadian real-
estate market and lagging auto
sales.
The bank had a loan-loss
provision of C$2.24 billion in
the quarter, up from C$2.18
billion a year earlier.
The bank raised its quar-
terly dividend to C$0.91 from
C$0.87.
NAV %RETURN
GF AT LB DATE CR NAV YTD 12-MO 2-YR
OT OT MUS 08/18 USD 305085.29 1.0 0.7 5.1
B6 | Thursday, August 24, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
19434.64 s 50.80, or 0.26% Year-to-date s 1.68% 373.92 t 1.88, or 0.50% Year-to-date s 3.46% 2444.04 t 8.47, or 0.35% Trailing P/E ratio 23.49 24.85
High, low, open and close for each 52-wk high/low 20230.41 16251.54 High, low, open and close for each 52-wk high/low 396.45 328.80 High, low, open and close for each P/E estimate * 18.69 18.60
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 2.00 2.10
All-time high: 2480.91, 08/07/17

Weekly P/E data based on as-reported earnings from Birinyi Associates Inc.

20500 395 2480

65-day moving average

20000 390 2450

19500 385 2420

Session high 19000 380 2390

DOWN UP
65-day moving average
t

Session open Close

18500 375 2360
Close Open
t

65-day moving average

Session low 18000 370 2330

Bars measure the point change from session's open

17500 365 2300
May June July Aug. May June July Aug. May June July Aug.

International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2823.10 2.34 0.08 2386.93 2881.15 11.7 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1922.61 1.91 0.10 1614.17 1955.39 12.0 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 1077.56 5.04 0.47 838.96 1078.53 35.7 2.750 Australia 2 1.854 54.1 50.1 50.7 68.0 1.835 1.847 1.422
2.750 10 2.683 51.1 44.0 46.8 31.0 2.654 2.707 1.858
Americas DJ Americas 588.48 1.44 0.24 503.44 599.20 8.9
3.000 Belgium 2 -188.2 -189.3 -183.7 -130.1 -0.559 -0.497 -0.560
-0.568
Brazil Sao Paulo Bovespa 70463.23 451.98 0.65 56459.11 70586.93 17.0
0.800 10 0.687 -148.6 -150.3 -146.0 -142.1 0.711 0.779 0.127
Canada S&P/TSX Comp 15069.52 84.56 0.56 14319.11 15943.09 1.4
0.000 France 2 -0.509 -182.2 -182.2 -173.5 -130.9 -0.488 -0.395 -0.568
Mexico IPC All-Share 51310.81 22.17 0.04 43998.98 51772.37 12.4
1.000 10 0.684 -148.8 -151.1 -149.2 -141.0 0.703 0.747 0.139
Chile Santiago IPSA 3896.02 10.06 0.26 3120.87 3908.55 20.9
0.000 Germany 2 -0.726 -204.0 -204.7 -197.8 -136.6 -0.713 -0.638 -0.624
U.S. DJIA 21812.09 87.80 0.40 17883.56 22179.11 10.4
0.500 10 0.377 -179.5 -181.1 -173.3 -164.2 0.403 0.506 -0.094
Nasdaq Composite 6278.41 19.07 0.30 5034.41 6460.84 16.6
0.050 Italy 2 -0.024 -133.7 -136.7 -134.8 -82.5 -0.033 -0.007 -0.083
S&P 500 2444.04 8.47 0.35 2083.79 2490.87 9.2
2.200 10 2.117 -5.5 -11.8 -16.2 -41.3 2.097 2.077 1.136
CBOE Volatility 11.85 0.50 4.41 8.84 23.01 15.6
0.100 Japan 2 -0.130 -144.3 -146.5 -145.5 -94.7 -0.131 -0.115 -0.205
EMEA Stoxx Europe 600 373.92 1.88 0.50 328.80 396.45 3.5 0.100 10 0.036 -213.6 -217.4 -216.8 -163.9 0.040 0.071 -0.091
Stoxx Europe 50 3040.09 14.52 0.48 2720.66 3279.71 1.0 4.000 Netherlands 2 -0.672 -198.5 -199.5 -197.7 -133.0 -0.661 -0.637 -0.588
Austria ATX 3184.82 8.62 0.27 2282.42 3285.00 21.6 0.750 10 0.506 -166.6 -168.5 -161.4 -152.2 0.529 0.624 0.026
Belgium Bel-20 3909.70 21.05 0.54 3384.68 4055.96 8.4 4.750 Portugal 2 0.003 -131.0 -133.2 -127.5 -26.7 0.002 0.065 0.475
France CAC 40 5115.39 16.47 0.32 4310.88 5442.10 5.2 4.125 10 2.788 61.6 53.7 66.2 145.7 2.751 2.901 3.005
Germany DAX 12174.30 55.04 0.45 10174.92 12951.54 6.0 2.750 Spain 2 -0.362 -167.5 -168.3 -164.5 -93.8 -0.349 -0.305 -0.196
Greece ATG 829.16 3.62 0.43 548.72 859.78 28.8 1.450 10 1.565 -60.7 -76.2 -78.3 -59.8 1.452 1.456 0.950
Hungary BUX 37753.22 130.75 0.35 27466.59 37769.02 18.0 4.250 Sweden 2 -0.674 -198.7 -200.0 -205.4 -138.6 -0.666 -0.714 -0.645
Israel Tel Aviv 1395.75 11.30 0.80 1346.71 1490.23 5.1 1.000 10 0.622 -155.0 -158.5 -161.9 -145.6 0.629 0.620 0.092
Italy FTSE MIB 21620.28 109.20 0.50 15923.11 22065.42 12.4 1.750 U.K. 2 0.191 -112.3 -111.5 -107.9 -61.2 0.219 0.262 0.130
Netherlands AEX 519.36 2.51 0.48 436.28 537.84 7.5 4.250 10 1.061 -111.1 -112.6 -106.3 -100.2 1.088 1.176 0.546
Poland WIG 62699.83 50.42 0.08 46321.24 63351.24 21.1 1.375 U.S. 2 1.313 ... ... ... ... 1.334 1.340 0.742
Russia RTS Index 1044.96 5.52 0.53 944.88 1196.99 9.3 2.250 10 2.172 ... ... ... ... 2.214 2.239 1.548
Spain IBEX 35 10338.10 71.70 0.69 8509.80 11184.40 10.5
Sweden SX All Share 554.94 0.67 0.12 489.12 598.42 3.8 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8958.49 5.34 0.06 7585.56 9198.45 9.0 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 56162.30 128.34 0.23 48935.90 56396.24 10.9 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 8/22/2017
Turkey BIST 100 108952.73 358.28 0.33 71792.96 110321.81 39.4
One-Day Change Year Year
U.K. FTSE 100 7382.65 0.91 0.01 6654.48 7598.99 3.4 Commodity Exchange Last price Net Percentage high low

Asia-Pacific Corn (cents/bu.) CBOT 355.75 -4.25 -1.18% 417.25 355.50

Soybeans (cents/bu.) 938.00 0.50 0.05% 1,047.00 907.00
Australia S&P/ASX 200 5737.20 12.90 0.22 5156.60 5956.50 1.3
Wheat (cents/bu.)
CBOT
CBOT 430.50 1.50 0.35 592.25 428.00
China Shanghai Composite 3287.70 2.52 0.08 2980.43 3292.64 5.9
Live cattle (cents/lb.) CME 105.950 -1.775 -1.65 122.850 99.125
Hong Kong Hang Seng 27401.67 Closed 21574.76 27854.91 24.5
Cocoa ($/ton) ICE-US 1,869 -17 -0.90 2,301 1,794
India S&P BSE Sensex 31568.01 276.16 0.88 25765.14 32575.17 18.6
Coffee (cents/lb.) ICE-US 128.65 -0.45 -0.35 166.75 119.10
Japan Nikkei Stock Avg 19434.64 50.80 0.26 16251.54 20230.41 1.7
Sugar (cents/lb.) ICE-US 13.70 0.19 1.41 20.50 12.74
Singapore Straits Times 3260.05 3.74 0.11 2787.27 3354.71 13.2
Cotton (cents/lb.) ICE-US 68.87 1.06 1.56 75.72 66.15
South Korea Kospi 2366.40 1.07 0.05 1958.38 2451.53 16.8 Robusta coffee ($/ton) ICE-EU 2101.00 -34.00 -1.59 2,272.00 1,892.00
Taiwan Weighted 10406.81 14.74 0.14 8902.30 10579.38 12.5
Copper ($/lb.) COMEX 3.0040 -0.0035 -0.12 3.0360 2.5025
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1295.30 4.30 0.33 1,307.00 1,160.80
Silver ($/troy oz.) COMEX 17.160 0.100 0.59 18.875 14.440
Currencies London close on Aug. 23 Aluminum ($/mt)* LME 2,084.50 2.50 0.12 2,089.00 1,688.50
Tin ($/mt)* LME 20,490.00 90.00 0.44 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Wed YTDchg Copper ($/mt)* LME 6,621.00 71.00 1.08 6,621.00 5,491.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,370.00 -24.00 -1.00 2,481.00 2,022.00
10% Europe Zinc ($/mt)* LME 3,144.00 unch. unch. 3,144.00 2,450.50
Bulgaria lev 0.6034 1.6574 10.8 Nickel ($/mt)* LME 11,480.00 260.00 2.32 11,480.00 8,780.00
s WSJ Dollar index Croatia kuna 0.1593 6.279 12.5
0 Rubber (Y.01/ton) TCE 216.50 -0.70 -0.32 n.a. n.a.
Euro zone euro 1.1801 0.8474 10.9
Czech Rep. koruna-b 0.0452 22.146 13.8 Palm oil (MYR/mt) MDEX 2739.00 2.00 0.07 2950.00 2380.00
Yen s s Euro
10 Denmark krone 0.1586 6.3034 10.8 Crude oil ($/bbl.) NYMEX 48.38 0.55 1.15 58.34 42.52
Hungary forint 0.003898 256.54 12.8 NY Harbor ULSD ($/gal.) NYMEX 1.6293 0.0330 2.07 1.8138 1.3814
Iceland krona 0.009322 107.27 5.0 RBOB gasoline ($/gal.) NYMEX 1.5272 0.0257 1.71 1.6860 1.2902
20 Norway krone 0.1269 7.8789 8.9
0.2754 3.6305 13.3
Natural gas ($/mmBtu) NYMEX 2.961 -0.007 -0.24 3.5660 2.7990
2016 2017 Poland zloty
Russia ruble-d 0.01693 59.058 3.6 Brent crude ($/bbl.) ICE-EU 52.22 0.64 1.24 60.08 45.19
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1238 8.0772 11.3 Gas oil ($/ton) ICE-EU 482.50 7.75 1.63 534.00 408.25
Wed Wed
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0342 0.9669 5.1
Turkey lira 0.2871 3.4827 1.2 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1278 7.8263 0.9
Ukraine hryvnia 0.0391 25.5950 5.5
Argentina peso-a 0.0581 17.2249 8.5
India rupee
Indonesia rupiah
0.0156
0.0000749
64.0450
13359
5.8
1.2
U.K. pound 1.2789 0.7819 3.5 Cross rates London close on Aug 23
Brazil real 0.3175 3.1501 3.2 Middle East/Africa
Japan yen 0.009162 109.14 6.7
Canada dollar 0.7960 1.2563 6.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002996 333.78 0.03 Bahrain dinar 2.6522 0.3771 0.03
Chile peso 0.001560 641.00 4.3 Australia 1.2668 1.6203 1.3104 0.0116 0.1619 1.4949 1.0086 ...
Macau pataca 0.1241 8.0583 1.8 Egypt pound-a 0.0564 17.7387 2.2
Colombia peso 0.0003350 2985.10 0.6 Canada 1.2563 1.6066 1.2994 0.0115 0.1605 1.4823 ... 0.9916
Malaysia ringgit-c 0.2337 4.2790 4.6 Israel shekel 0.2766 3.6149 6.1
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7208 1.3873 3.9 Kuwait dinar 3.3129 0.3019 1.2 Euro 0.8474 1.0838 0.8765 0.0078 0.1083 ... 0.6746 0.6689
Mexico peso-a 0.0565 17.7127 14.6
Pakistan rupee 0.0095 105.367 1.0 Oman sul rial 2.5974 0.3850 0.01 Hong Kong 7.8263 10.0090 8.0950 0.0717 ... 9.2354 6.2299 6.1773
Peru sol 0.3089 3.2372 3.5
Philippines peso 0.0195 51.154 3.1 Qatar rial 0.2746 3.641 0.03 Japan 109.1440 139.5900 112.9000 ... 13.9460 128.7900 86.8900 86.1700
Uruguay peso-e 0.0348 28.760 2.0
Singapore dollar 0.7341 1.3622 5.9 Saudi Arabia riyal 0.2666 3.7503 0.01 0.9669 1.2364 ... 0.0089 0.1235 1.1410 0.7696 0.7631
Venezuela bolivar 0.100009 10.00 0.04 Switzerland
South Korea won 0.0008853 1129.61 6.5 South Africa rand 0.0757 13.2119 3.5
U.K. 0.7819 ... 0.8088 0.0072 0.0999 0.9228 0.6225 0.6172
Asia-Pacific Sri Lanka rupee 0.0065372 152.97 3.1 Close Net Chg % Chg YTD % Chg
0.7894 1.2668 8.8 Taiwan dollar 0.03302 30.284 U.S. ... 1.2789 1.0342 0.0092 0.1278 1.1801 0.7960 0.7894
Australia dollar 6.7 WSJ Dollar Index 86.11 0.11 0.13 7.35
China yuan 0.1501 6.6619 4.1 Thailand baht 0.02997 33.370 6.8 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 4 p.m. New York time

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 1.23444% 0.51994% TakedaPharm 4502 5892.00 0.75 21.86 CHF RocheHldgctf ROG 242.90 -0.04 4.43 Last: 164.74 s 0.60, or 0.36% YTD s 16.9%
Three month 1.31722 0.82544 Asia Titans HK$ TencentHoldings 0700 324.00 -0.61 70.80 RoyDtchShell A RDSA 2139.50 0.85 -4.59
Six month 1.45556 1.22344 HK$ AIAGroup 1299 58.70 1.03 34.17 TokioMarineHldg 8766 4425.00 0.57 -7.74 SAP SAP 89.28 -0.35 7.81 High 170
One year 1.72789 1.52656 81.80 -0.54 6.37
AstellasPharma 4503 1385.00 0.14 -14.69 ToyotaMtr 7203 6173.00 0.57 -10.25 Sanofi SAN Close 165
Euro Libor AU$ AustNZBk ANZ 29.90 ... -1.71 AU$ Wesfarmers WES 41.52 0.41 -1.47 SchneiderElectric SU 67.72 -0.53 2.44 Low 160
One month -0.39857% -0.37143% AU$ BHP BHP 26.04 0.23 3.91 AU$ WestpacBanking WBC 32.51 0.12 -0.28 Siemens SIE 112.15 -0.71 -3.98 t
Three month -0.37400 -0.32029 HK$ BankofChina 3988 3.91 1.30 13.66 AU$ Woolworths WOW 26.94 -0.44 11.78 Telefonica TEF 9.08 -0.89 2.97 155
Six month -0.30700 -0.20314 102.70 1.38 16.84 Total FP 43.67 0.59 -8.55 50day
HK$ CKHutchison 0001
moving average 150
One year -0.20471 -0.07286 HK$ CNOOC 0883 9.08 0.89 -6.39 Stoxx 50 CHF UBSGroup UBSG 16.09 -0.25 0.88
145
Euribor AU$ CSL CSL 128.33 0.22 27.81 Unilever UNA 49.91 -0.58 27.60
CHF ABB ABBN 22.33 0.09 3.96
One month -0.37100% -0.36800% Canon 7751 3802.00 0.66 15.39 Unilever ULVR 4514.50 -0.02 37.11 26 2 9 16 23 30 7 14 21 28 4 11 18
ASMLHolding ASML 130.10 -0.34 21.99
Three month -0.32900 -0.29800 CentralJapanRwy 9022 18160 0.28 -5.56 Vinci DG 76.10 -0.72 17.62 June July Aug.
AXA CS 24.62 -0.34 2.67
Six month -0.27300 -0.19100 HK$ ChinaConstructnBk 0939 6.62 1.38 10.89 VodafoneGroup VOD 220.25 -0.41 10.21
AirLiquide AI 103.70 -0.14 -1.85
One year -0.15900 -0.04800 HK$ ChinaLifeInsurance 2628 23.85 2.58 18.07 CHF ZurichInsurance ZURN 293.00 0.10 4.49
181.60
Yen Libor HK$ ChinaMobile 0941 87.45 0.29 6.39


Allianz
AB InBev
ALV
ABI 98.38
-0.71 15.67
-1.16 -2.16 DJIA Stoxx 50
One month -0.03871% -0.05343% HK$ ChinaPetro&Chem 0386 5.72 0.53 4.00 AstraZeneca AZN 4495.00 1.38 1.30 Last: 3040.09 t 14.52, or 0.48% YTD s 1.0%
Three month -0.03264 -0.02721 AU$ CmwlthBkAust CBA 78.21 -0.57 -5.10 BASF BAS 82.37 0.18 -6.73
$ AmericanExpress AXP 85.28 -0.02 15.12
Six month -0.00707 0.00143 EastJapanRailway 9020 10105 0.10 0.05 BNP Paribas BNP 64.17 -1.46 5.98
$ Apple AAPL 159.98 0.13 38.13 3275
One year 0.11029 0.09914 Fanuc 6954 21220 -0.33 7.09 BT Group BT.A 293.00 0.02 -20.14
$ Boeing BA 238.23 -0.63 53.03
$ Caterpillar CAT 114.75 -0.92 23.74 3200
Offer Bid Hitachi 6501 726.30 0.64 14.92 BancoBilVizAr BBVA 7.42 -1.20 16.84
TW$ Hon Hai Precisn 2317 115.00 ... 36.58 $ Chevron CVX 106.67 0.29 -9.37 3125
Eurodollars BancoSantander SAN 5.43 -0.88 9.56
HondaMotor 7267 3027.00 0.17 -11.36 $ CiscoSystems CSCO 30.92 -1.12 2.32
One month 1.3100% 1.2100% Barclays BARC 192.85 -0.23 -13.69 3050
KRW HyundaiMtr 005380 146500 -0.34 0.34 $ Coca-Cola KO 45.54 -0.13 9.84
Three month 1.3900 1.2900 Bayer BAYN 108.05 -0.78 9.00
2975
HK$ Ind&Comml 1398 5.62 2.55 20.86 $ Disney DIS 101.50 -1.24 -2.61
Six month 1.5800 1.4800 BP BP. 444.50 0.52 -12.77
$ DuPont DD 82.78 -0.28 12.78
One year 1.8300 1.7300 JapanTobacco 2914 3741.00 0.03 -2.68 BritishAmTob BATS 4728.50 -0.93 2.32 2900
KDDI 2950.50 1.08 -0.30
$ ExxonMobil XOM 76.61 -0.17 -15.12
Latest 52 wks ago 9433 Daimler DAI 60.77 -0.10 -14.07 $ GeneralElec GE 24.39 -0.85 -22.82 26 2 9 16 23 30 7 14 21 28 4 11 18
Mitsubishi 8058 2488.00 -0.68 -0.08 DeutscheTelekom DTE 15.43 -0.84 -4.71 $ June July Aug.
Prime rates GoldmanSachs GS 222.79 -0.35 -6.96
MitsubishiElectric 6503 1646.50 0.27 1.04 Diageo DGE 2578.50 -0.06 22.20 $
U.S. 4.25% 3.50% HomeDepot HD 149.11 -0.53 11.21
MitsubishiUFJFin 8306 665.30 -0.42 -7.62 ENI ENI 13.15 0.08 -15.00 $
Canada 2.95 2.70 Intel INTC 34.66 0.03 -4.44
1605.00 -0.62 -0.12 1517.00
Japan
Hong Kong
1.475
5.00
1.475
5.00


Mitsui
Mizuho Fin
8031
8411 187.20 -0.05 -10.77


GlaxoSmithKline
Glencore
GSK
GLEN 353.10
0.86 -2.88 $
1.29 27.31 $
IBM
JPMorganChase
IBM
JPM
142.20
91.67
0.84 -14.33
0.12 6.23
Dow Jones Industrial Average P/E: 20
NTTDoCoMo 9437 2576.00 1.50 -3.27 HSBC Hldgs HSBA 740.90 -0.09 12.79 $ J&J JNJ 132.78 -1.43 15.25 Last: 21812.09 t 87.80, or 0.40% YTD s 10.4%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 30.79 -0.13 0.39 INGGroep INGA 15.03 -0.83 12.38 $ McDonalds MCD 158.78 -0.54 30.45
Britain 0.25 0.25
NipponTeleg 9432 5383.00 1.03 9.59 ImperialBrands IMB 3198.00 0.03 -9.72 $ Merck MRK 62.17 -0.40 5.61 22000
Switzerland 0.50 0.50
NissanMotor 7201 1090.00 -0.18 -7.27 IntesaSanpaolo ISP 2.83 -1.46 16.82 $ Microsoft MSFT 72.72 -0.60 17.03
Panasonic 6752 1459.50 0.14 22.70 LVMHMoetHennessy MC 216.95 -0.91 19.60 $ Nike NKE 53.61 -0.96 5.47
21500
Australia 1.50 1.50
HK$ PingAnInsofChina 2318 63.20 4.20 62.89 LloydsBankingGroup LLOY 65.40 0.55 4.62 $ Pfizer PFE 33.25 0.30 2.37
U.S. discount 1.75 1.00 21000
Fed-funds target 1.00-1.25 0.25-0.50
$ RelianceIndsGDR RIGD 49.10 1.55 55.63 LOreal OR 178.25 0.62 2.80 $ Procter&Gamble PG 92.44 -0.38 9.94
Call money 3.00 2.25
KRW SamsungElectronics 005930 2374000 1.02 31.74 NationalGrid NG. 970.50 -0.16 -6.51 $ 3M MMM 202.72 -0.76 13.52 20500
Seven&I Hldgs 3382 4409.00 0.36 -0.99 CHF Nestle NESN 82.05 0.12 12.32 $ Travelers TRV 127.14 -0.49 3.86
Overnight repurchase rates 20000
U.S. 1.09% 0.47%
SoftBankGroup 9984 8799.00 1.34 13.32 CHF Novartis NOVN 80.55 -0.12 8.70 $ UnitedTech UTX 117.00 1.13 6.73
Euro zone n.a. n.a.
Sony 6758 4237.00 1.10 29.37 DKK NovoNordiskB NOVO-B 287.90 -1.17 13.03 $ UnitedHealth UNH 194.20 -0.30 21.34 26 2 9 16 23 30 7 14 21 28 4 11 18
Sumitomo Mitsui 8316 4046.00 -0.10 -9.28 Prudential PRU 1811.00 -0.36 11.27 $ Visa V 103.16 -0.87 32.22 June July Aug.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 122.90 0.41 25.41 ReckittBenckiser RB. 7353.00 0.29 6.78 $ Verizon VZ 48.31 -0.07 -9.49 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 215.50 0.47 18.73 RioTinto RIO 3615.00 2.13 14.45 $ Wal-Mart WMT 79.95 -0.09 15.67 Sources: WSJ Market Data Group; Birinyi Associates
THE WALL STREET JOURNAL. Thursday, August 24, 2017 | B7

FINANCE & MARKETS

Weak Earnings Metals Prices Tumble in China

Hurt U.S. Stocks
BY RIVA GOLD
AND AMRITH RAMKUMAR
Disappointing earnings and
political turbulence put re-
newed pressure on U.S. stocks
Wednesday.
The Dow Jones Industrial
Average fell 87.80 points, or
0.4%, to 21812.09 after its larg-
est one-day advance since
April, and
bit of a cautious stance, said
Michael Hans, chief invest-
ment officer at Clarfeld Finan-
cial Advisors. Theres no pan-
icked feeling of risk-off. Its
just a little bit of a pullback
and caution, he said.
Last week, some weak earn-
ings and fallout from Mr.
Trumps comments about the
protests in Charlottesville, Va.,
weighed on stocks as several
SHANGHAIChinese metals
prices slid as sentiment was
battered by fresh warnings
that a recent upsurge in steel
weeks is vulnerable to an ex-
pected moderation in con-
struction-sector activity in
coming months, together with
was unsustainable, the latest oversupply conditions for iron
move by regulators to tame ore, with still-high stockpiles
volatility in of iron ore at Chinese ports,
COMMODITIES the futures said Rajiv Biswas, the Asia-Pa-
market. cific chief economist at IHS
The main Markit.
steel-rebar futures contract in Strong speculative trading
Shanghai snapped a four-day in Chinese commodities mar-
series of gains to close down kets has also contributed to
4% Wednesday at 3,779 yuan the metals and iron-ore price
($567.60) a metric ton, while rally, creating risks of greater
hot-rolled-coil futures tumbled price volatility, he added.

WEDNESDAYS the S&P
MARKETS 500 shed
0.35%. The
N a s d a q
Composite declined 0.3%, fol-
lowing the tech-heavy indexs
best session since late June.
In Europe, the Stoxx Europe
600 edged down 0.5% to
373.92 following its best ses-
sion in more than a week.
Company reports drove
some of the days biggest
moves in individual stocks.
Lowes was among the worst
performers in the S&P 500,
down 3.9% in late trading after
the home-improvement re-
tailer posted earnings that fell
below analyst expectations
and lowered its outlook for the
year. The report caused Home
Depot shares to fall 0.5%.
Coty was an S&P 500 lag-
gard for the second consecu-
tive day after reporting weak
beauty sales in the most re-
cent quarter. Shares fell 5.3%.
The media sector led de-
clines in Europe as shares of
WPP, the worlds largest ad-
vertising company, fell 11% af-
ter it lowered its forecast for
the year, reflecting a wider
slowdown in industries such
as consumer goods and retail.
Peers Omnicom Group and
Interpublic Group of Cos. were
down 7% and 6.3%, respec-
tively, in the U.S.
Some analysts and inves-
tors said President Donald
Trumps threat to shut down
the government to secure
funding for a wall on the
southwest border with Mexico
contributed to Wednesdays
declines in the U.S.
Thats giving investors a
business leaders distanced
themselves from the presi-
dent.
Some said a quiet period
with few economic data re-
leases was also partially re-
sponsible for recent market
jitters. The Dow jumped nearly
200 points on Tuesday as
shares rebounded from a re-
cent dip.
With valuations elevated
here, the market is going to be
more vulnerable to short-term
negative news and negative
shocks, said Katie Nixon,
chief investment officer at
Northern Trust Wealth Man-
agement.
But unless something really
impacts the economy, its un-
likely that the market impact
will be long-lasting, she said,
given the current state of
growth and corporate earnings.
The Mexican peso, among
the years best-performing
currencies, dropped 0.3%
against the dollar after Mr.
Trumps comments.
Government bonds rose,
with the yield on the 10-year
U.S. Treasury note falling to
2.171%, according to Tradeweb,
from 2.215% Tuesday. Yields
fall as prices rise.
Elsewhere, Japans Nikkei
Stock Average jumped from its
lowest close in months but
pared gains to 0.3% as the yen
rose against the dollar.
The Shanghai Composite In-
dex declined less than 0.1%,
ending a four-day rally, with
steel and precious-metals
stocks the biggest decliners.
Trading in Hong Kong was
halted as Typhoon Hato
passed by the city.
4.4% to 3,865 yuan a ton.
On the Dalian Commodity
Exchange, iron-ore futures fell
3.8% to 578.5 yuan a ton, after
soaring more than 20% over
the past four sessions.
The China Iron and Steel
Association said steel prices
surged in July thanks to a con-
fluence of factors including
stable demand, capacity cuts
and policies to reduce pollu-
tion.
The rise in prices goes
against stable operation of the
steel industry but is unlikely
to persist in coming months as
new capacity is set to ease a
potential supply shortage, the
group said late Tuesday.
The industry body also said
higher iron-ore prices and a
surge in steel-product prices
triggered 19.3 million tons of
decline in steel exports during
Treasury Yields Drop on Trump Comments
BY AKANE OTANI
U.S. government-bond
prices rose as combative rhet-
oric from the White House
pressured stocks while stoking
demand for as-
CREDIT sets seen as
MARKETS safer stores of
value.
The yield on
the benchmark 10-year U.S.
Treasury note declined to
2.171% compared with 2.215%
Tuesday. Yields fall as bond
prices rise.
Stocks fell, while assets
viewed by investors as havens,
An industry body says a recent steel surge is unsustainable.
the first seven months of this
year, down 29% from a year
ago.
On the same day, the coun-
trys top prosecutor vowed to
intensify a crackdown on fi-
nancial crimes that disrupt se-
curities and futures markets.
It will thoroughly investigate
and deal with financial croco-
diles who have caused a stir
on the market as well as those
engaged in insider trading, the
Supreme Peoples Procurator-
ate said.
Investors fled the market
out of rising pressure from
policy makers, who want to
avoid big fluctuations on the
commodity market, said Ye
Yanwu, research director at
such as government bonds and
gold, climbed after President
Donald Trump said Tuesday
evening he would shut down
the government if necessary to
secure funding to build a wall
along the southwest border.
Speaking at his first rally
after a violent white-suprema-
cist protest in Charlottesville,
Va., Mr. Trump also attacked
his Republican colleagues for
their failure to repeal and re-
place the Affordable Care Act
and said he might terminate
the North American Free
Trade Agreement.
The rhetoric and belliger-
REUTERS
Chaos Ternary Futures.
We believe that down-
stream demand will remain
relatively robust in the later
half of this year, which could
cause a slight supply short-
age, Mr. Ye said.
Stronger-than-expected
economic growth in China, a
weaker U.S. dollar and govern-
ment-led capacity cuts have
buoyed bullish sentiment in
metals futures this year to
multiyear highs. As specula-
tors have swarmed into trad-
ing metals, unease has
mounted over whether the
current boom could be fol-
lowed by a bust.
The strong rally in steel
and iron-ore prices in recent
ence out of Washington is a
gift that keeps on giving to
the bond market, said Bryce
Doty, a portfolio manager at
Sit Investment Associates.
Still, any rebound in the
bond market is likely to be
short-lived, investors and ana-
lysts say. Treasurys have
largely traded in a narrow
range this summer even after
developments such as a flare-
up in tensions between North
Korea and the U.S., White
House staffing changes and
fallout in the business commu-
nity over Mr. Trumps re-
sponse to the Charlottesville
In July, Chinas iron-ore fu-
tures jumped 18% while steel
rebar gained 15% before a pe-
riod of declines kicked in fol-
lowing official warnings over
irrational speculation. Yet
both metals rebounded to
year-to-date highs last week
as investors bet on supply
shortages later this year.
The CISA said on Aug. 10
that the surge in rebar futures
was due to speculative be-
havior that wasnt caused by
demand or reductions in sup-
plies of steel.
A J.P. Morgan report this
week said that with the ex-
ception of aluminum, we still
see fundamentally weaker
markets in the second half of
the year, especially towards
year-end.
Yifan Xie
and Biman Mukherji
protests.
In another sign of a lull, a
measure of expected volatility
in the Treasury marketthe
Bank of America Merrill
Lynch MOVE Indexfell to an
all-time low earlier this
month. It has traded near that
level since then.
The real risks to the Trea-
surys market, many say, wont
come until next month, when
the Federal Reserve is ex-
pected to begin reducing its
vast portfolio of bonds and
other assets, and possibly of-
fer clues on the path for inter-
est-rate increases.

WS J TALK / E XPERIENCE / OFFER / GE TAWAY

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B8 | Thursday, August 24, 2017 THE WALL STREET JOURNAL.

MARKETS
A Funds Case for Buying Venezuelan Debt
BY CHRISTOPHER WHITTALL
AND GEORGI KANTCHEV U.S. Weighs Curbs Until now, the progressive
waves of U.S. sanctions have
Last month, Venezuelan On Trading Bonds targeted dozens of Venezuelan
bond prices tumbled when officials, banning them from
President Nicols Maduro won traveling to the U.S. and freez-
a controversial vote that his WASHINGTONThe U.S. ing any assets in the country
opponents said would pave the government is considering re- for alleged human-rights
way to dictatorship. stricting trades in Venezuelan abuses and corruption.
But one large holder of debt as it seeks to punish On Wednesday, Vice Presi-
Venezuelan debt, Ashmore President Nicols Maduro for dent Michael Pence was sched-
Group PLC, thinks investors undermining the countrys de- uled to speak to Venezuelan
came to the wrong conclusion. mocracy, according to people expatriates in Miami.
Mr. Maduros political familiar with the matter. The ban is designed to
power has just increased dra- The unprecedented move damage Mr. Maduros support
matically, said Jan Dehn, would temporarily ban U.S.-reg- among military officers and
head of research at the emerg- ulated financial institutions government contractors who
CARLOS BECERRA/BLOOMBERG NEWS

ing-market fund, which has from buying and selling dollar- hold Venezuelan bonds, with-
$56 billion under manage- denominated bonds issued by out immediately hurting the
ment. The July vote, which the Republic of Venezuela and wider population, said the per-
was widely seen as fraudulent, state oil company Petrleos de son briefed on the matter.
convened a powerful new as- Venezuela SA, according to a Mr. Maduros government
sembly aligned with Mr. Ma- person who was briefed on the has continued making bond
duro that will be able to over- proposal. Another person famil- payments even as the country
ride other institutions and iar with the matter cautioned is undergoing a severe reces-
redraft the constitution. that the measure was one of sion, rewarding risk-tolerant
Mr. Maduros administra- President Nicols Maduro has prioritized paying bondholders even as the economy has shrunk. several steps under consider- investors with the worlds
tion has prioritized paying ation regarding Venezuela. The highest yields. Many major
bondholders, even as the fault would push investors to person said the final decision U.S. fund managers rely on
wider economy has shrunk, High Returns try to seize PdVSAs foreign would rest with President Don- Venezuelan debt for growth at
sparking widespread unrest Cumulative total return on Venezuelan bonds* assets. Mr. Dehn has another ald Trump. a time when some rich coun-
and food shortages. As long as theory over what is behind One option being consid- tries offer negative interest
he retains a tight grip on 100% that fear: that PdVSAs joint- ered is banning the trading in rates on their bonds.
power, that is unlikely to venture partners, such as Rus- just some securities issued by The Venezuelan government
80
change, Mr. Dehn believes. sias PAO Rosneft and China, the state oil company to limit has about $65 billion of out-
Mr. Dehns response under- would pull lines of credit if the its access to external funds, standing debt, which is among
60
scores how some big interna- country defaulted. That would said a third person. the most frequently traded in
tional investors remain intent 40 starve PdVSA of working capi- The ban would be the first the emerging markets.
on staying invested in Venezu- tal and prevent it from pro- step against the Venezuelan fi- Mr. Maduro has prioritized
elan debt, even as the country 20 ducing oil. If he stops [servic- nancial system since Mr. international debt payments at
is buffeted by internal strife, ing the debt]oil production Trump promised swift eco- all costs, even as the country
lower oil prices and U.S. criti- 0 will stop. The government will nomic action against Mr. Ma- sank deeper into an economic
cism. The Wall Street Journal fall, said Mr. Dehn. duro for installing a parallel crisis and his government has
reported late Tuesday that 20 The Venezuelan govern- parliament staffed with loyal- cut back on imports of food
Washington is considering 2015 16 17 ment didnt respond to a re- ists earlier this month. and medicine.
temporarily banning U.S.-regu- quest for comment.
*Bloomberg Barclays Emerging Markets USD Aggregate Venezuela bond index.
lated financial institutions Through Tuesday. There are many analysts
from buying and selling dollar- Source: FactSet THE WALL STREET JOURNAL. who believe that Venezuela the International Energy Goldman Sachs Group Inc.
denominated bonds issued by will default. Agency. came under fire after buying
Venezuela and state oil com- strength is one of three fac- racas has defied predictions The oil industry is under Citigroup Inc. believes the $2.8 billion of Venezuelan
pany Petrleos de Venezuela tors that should mean the that it would default on its ex- enormous pressure, said He- government can cover debt- bonds this year. Credit Suisse
SA, or PdVSA. country can continue to ser- ternal debt pile. lima Croft, head of commodity servicing payments this year Group AG recently said it
The bonds moved slightly vice the debt indefinitely, he Most analysts and investors strategy at RBC Capital Mar- unless oil prices plummet. But would not trade certain Vene-
lower on Wednesday following said. The other two are that believe that this is because the kets. Ms. Croft believes that by a 2018 debt restructuring is zuelan bonds.
the news, according to data oil remains above $40 a barrel government wants to keep the autumn, the state-owned com- likely, not because they want Mr. Dehn said he didnt
from Thomson Reuters. Mr. and that PdVSA retains access oil flowing. PdVSA is responsi- pany could be faced with either to, but because they have to, condone the actions of the
Dehn said that the report to working capital. ble for half of Venezuelas fis- a default on its debt or the said Donato Guarino, a strate- Venezuelan government and
didnt change his view on Ven- Many Venezuelan bonds cal income and some 90% of need to stop salary payments. gist at the bank. said that Ashmore bought
ezuelan debt and that Ash- have rebounded since the vote, its exports, according to Stan- In the past two years, pro- The investment has proved bonds on the secondary debt
more will comply if the law though they still trade at dis- dard & Poors. duction at PdVSA has fallen by controversial for some, given market. That means the fund
changes. tressed levels. Some analysts believe Vene- nearly a fifth as a cash crunch accusations of human-rights manager isnt lending fresh
Mr. Maduros political For roughly three years, Ca- zuelas fear is that a debt de- saps investments, according to abuses in Venezuela. money to the regime, he said.

Email: heard@wsj.com
HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

Invesco Has Right Mix at the Right Price The Problem

With Dissing
Shares of asset-manage- About a third of assets are
Investable Invesco
ment firms have taken a
drubbing over the past
month. This presents a com-
Forward price/earnings ratios for listed asset managers
held by clients outside the
U.S. This helps shield the
firm from forces rocking the
Teen Retailers
pelling buying opportunity industry and positions it Investing in teen retailer
for at least one promising BlackRock 17.7 times well should the U.S. dollar stocks has always been
company. keep declining. treacherous. Now, their vola-
Atlanta-based Invesco T. Rowe Price 15.0 Despite all these advan- tility is being compounded
stands out against many of tages, Invesco trades at a by low expectations.
its peers for its diversity Franklin Resources 14.6 discount to peers. It is cur- American Eagle Outfit-
across asset classes and rently valued at 12.3 times ters and Express reported
strategies. Since saying it ex- forward earnings, compared better-than-expected second-
Legg Mason 12.9
pects marginally higher ex- with an average 14.2 times quarter earnings Wednesday,
penses in a conference call for five other large, listed as- but they werent all that im-
last month, however, its Invesco 12.3 set managers. It is also pressive. While American Ea-
shares are down by about cheap relative to its five- gles Aerie brand posted 26%
9%. AllianceBernstein 10.9 year average of 13.1 times same-store sales growth,
After running up for much forward earnings. that metric was flat for its
of this year on strong stock- Sources: FactSet; Getty Images (photo) THE WALL STREET JOURNAL. Any investment in an as- much larger namesake
market performance, shares set manager is in part a bet brand. Same-store sales at
of several major asset man- below industry leader Black- industry trends. This in- joyed $5 billion of inflows on rising markets overall. Express fell 4% compared
agers have seen similar de- Rock at 65%, but well above cludes the acquisition of a into passive funds and an That has worked out fine with the 5.2% decline ana-
clines in recent weeks in a the negligible levels of many European ETF company and impressive $5.7 billion into this year, but should markets lysts had forecast. Merchan-
broad sector correction. others, including Franklin the development of a new actively managed ones. falter, Invesco could suffer dise margins fell at both re-
Invesco looks better posi- Resources, Legg Mason and robo-advisory service. It helps that Invesco isnt along with others. tailers amid increased
tioned than most in a key T. Rowe Price Group. The company saw minor overly concentrated in U.S. That said, given its low promotions.
growth area: passive invest- This matters because pas- outflows in the second quar- stocks, which is the indus- valuation, solid fundamen- Still, less-bad-than-feared
ment strategies. At the end sive funds are attracting the ter due to some factors, in- trys most vulnerable sector. tals and superior position- was enough to win the day.
of July, 18% of its total as- vast majority of inflows, es- cluding a redemption by a Just 45% of its assets under ing, Invesco is the best bet Shares of American Eagle
sets under management pecially in stocks. sovereign-wealth fund, but management are in stocks, among the bunch. The recent shot up 7%, while Express
were passively managed, in- Invescos rising costs are the underlying trend is with 24% in fixed income selloff in its shares makes rocketed 23% in late
cluding stock and bond ex- mostly related to strategic strong. Over the past four and 15% in alternative in- for an enticing entry point. Wednesday afternoon trad-
change-traded funds. That is investments to keep ahead of quarters, Invesco has en- vestments. Aaron Back ing, both helped by a short
squeeze.
Not all retailers have ben-
efited from low expectations.
Clouds Are Parting for Europe This Year OVERHEARD Results for department
stores Macys, Kohls and
As soon as the outlook a forecast reported by Fact- J.P. Morgan economists Nordstrom all exceeded
improves in Europe, the Set of 55.6, and well above said. That is well above es- American utilities reliant on captivates almost an entire na- forecasts, but investors
worries start. The latest the 50 level that separates timates of potential solar power should have tions attention makes people werent swayed.
cloud on the horizon has expansion from contrac- growth. learned a lesson from relatively act differently. Britains Na- Granted, the companies
been the rising euro, which tion. Importantly, eurozone cloudy England. tional Grid observed a sudden are working to improve their
has caused some jitters And there was little sign data is still beating expec- Mondays coast-to-coast 11% surge in electricity use in fates. American Eagle has se-
about the growth and infla- of any impact from a stron- tations, even after econo- eclipse was the first in nearly a 1990 as an estimated 1.12 mil- cured an average 8% reduc-
tion outlook, and may yet ger euro in the data. The mists have become more century and the first ever to lion tea kettles were switched tion in cash rents for the
create a headache for the German manufacturing PMI optimistic. Citigroups Eco- test the renewable energy sec- on during halftime of a key more than 350 leases it has
European Central Bank. But rose to 59.4 from 58.1 in nomic Surprise Index for tor. Of the 21.75 gigawatts of England World Cup match. negotiated or renegotiated
the eurozone of 2017 ap- July, and its French peer the eurozone has fallen solar generating capacity in the Or they could have taken a over the past two years.
pears to be proving a resil- hit its highest level since from its highs earlier this U.S., about 20 gigawatts were clue from a U.S. sporting event. Meanwhile, the growth at
ient place. 2011. IHS Markit reported year but has been in posi- at least 50% obscured and four Power usage is 5% lower dur- Aerie has been consistently
The latest sign of that is goods producers were se- tive territory since the end gigawatts were 90% obscured, ing the game on Super strong. Express closed all of
the preliminary IHS Markit curing new export orders of September 2016, in con- according to the U.S. Energy Bowl Sunday than on a compa- its Canadian stores in the
Purchasing Managers Index at the fastest pace in 6 trast to the steep plunge in Information Administration. rable winter day, according to quarter, eliminating an annu-
data for August. Econo- years. Moreover, domestic its U.S. peer this year. That led utilities to bring on Opower. Despite the wide- alized net loss of about $6
mists had expected a small demand has become a more The eurozone has suf- lots of extra juice to make up spread viewing of energy-hun- million, and is also closing
decline, but the surveys important source of euro- fered plenty of economic for the shortfall and some gry TVs, many people congre- U.S. stores.
Wednesday showed a small zone growth as the recov- false starts in recent years. power traders to bet on a rise gate around a single screen. These retailers may be do-
increase from already-re- ery has progressed. Increasingly, 2017 looks in prices. Instead, though, there Crowd behavior can over- ing better than expected, but
spectable levels. Overall, the PMIs are like the year it got its was a surplus. power cosmic forces some- investors shouldnt expect a
The eurozone composite consistent with growth groove back. It turns out something that times. miracle.
PMI came in at 55.8, versus running at 2.5% annually, Richard Barley Miriam Gottfried